India–UK FTA: A new model for growth and collaboration

On 6 May 2025, India and the United Kingdom agreed to a Free Trade Agreement (FTA) that marks a significant shift—from traditional trade deals focused on tariffs to a broader model of economic partnership built on talent, investment, innovation, and sustainability. While much of the focus has been on tariffs and trade volumes, the real story lies elsewhere. This deal redefines trade as a platform for long-term collaboration and investment in talent, innovation, digital governance, and sustainable development.

According to official estimates, the agreement could increase annual bilateral trade by GBP 25–34 billion by 2040, up from GBP 42.6 billion in 2024. This would make the India–UK FTA the UK's third-largest trade deal after its agreements with Japan and Australia, and a central pillar in Britain’s post-Brexit push to engage with high-growth economies. But beyond the trade figures, this deal is about building long-term capability between two economies with growing, mutually beneficial ties.

FTA unlocks India’s strength in exports and talent

The agreement opens the door for India to strengthen its global trade position, especially in sectors where it already has an edge. With zero-duty access to 99% of UK-bound goods, Indian exporters in textiles, marine products, auto components, and gems and jewellery stand to gain. Apparel and textiles, once hit with tariffs of up to 12%, will now enter duty-free, boosting competitiveness in a high-value market.

India’s tea, spices, and ready-to-eat foods will gain easier access to the UK retail market, helping local brands reach more consumers. In gems and jewellery, export momentum is expected to build fast, with exports projected to reach USD 2.5 billion within two years, nearly doubling total trade in the segment to around USD 7 billion.

Beyond goods, the agreement recognises India’s greatest global strength: its talent. It expands access in the IT, finance, consulting, and education sectors, where Indian firms already have a strong international presence. Streamlined mobility rules and clearer visa pathways could enable around 60,000 professionals to work in the UK annually, deepening the cross-border exchange of skills and expertise.

The accompanying Double Contributions Convention removes the burden of dual social security payments for short-term assignments. More than a technical fix, it reflects a broader shift in thinking, acknowledging that the movement of people is just as critical to modern trade as the movement of goods.

Stronger market access for the UK

While the FTA plays to India’s strengths in goods and talent, it also creates significant new opportunities for the United Kingdom. The agreement gives UK exporters a clear edge, with tariff reductions across products like whisky, cosmetics, chocolate, high-end vehicles, and industrial goods, making them far more competitive in India’s expanding consumer and manufacturing markets.

The UK will also gain access to India’s central government procurement market, valued at nearly GBP 38 billion annually. This includes around 40,000 public tenders across sectors such as infrastructure, healthcare, and smart cities—areas where many mid-sized UK firms already have strong capabilities.

Beyond market access, the agreement introduces meaningful trade facilitation reforms: simplifying customs procedures, reducing technical barriers, digitising documentation, and lowering entry thresholds for small and mid-sized businesses looking to operate in India. 

Big boost to investment

One of the most compelling effects of the agreement is the likely increase in bilateral investment. The groundwork is already strong. The Britain Meets India 2024 report shows 667 British firms now operate in India (up from 635 in 2023), generating approximately INR 5,082 billion (GBP 47.5 billion) in revenues and employing over 516,000 people. Indian investment in the UK is equally impressive. The India Meets Britain Tracker 2025 shows that 1,197 (up from 971 in 2024) Indian companies are active in the UK, employing 126,720 people and generating GBP 72.14 billion in revenue (up from GBP 68.09 billion in 2024).

This FTA could catalyse fresh capital flows, especially in sectors where trade and investment go hand-in-hand. For instance, UK whisky exports currently face tariffs of around 150% in India. Under the agreement, these duties will be cut to 75% on entry into force and reduced to 40% within ten years. The Scotch Whisky Association forecasts this could unlock GBP 1 billion in additional exports over five years, supporting about 1,200 UK jobs. Those savings could motivate major British distillers to invest in local bottling and blending facilities in India, streamlining logistics and aligning with “Make in India” preferences.

The Indian gems and jewellery sector is also expected to benefit significantly from the agreement, creating fresh opportunities for investment. In 2024, India exported USD 941 million worth of gems and jewellery to the UK. According to the Gem & Jewellery Export Promotion Council, this figure could rise to USD 2.5 billion within two years, potentially pushing total bilateral trade in the segment to around USD 7 billion.

A trade pact built for innovation, sustainability, and consumers

What sets this FTA apart is how it responds to contemporary global priorities. Its digital trade provisions allow seamless cross-border data flow, discourage forced data localisation, and protect intellectual property, creating the confidence needed for digital operations to scale. Provisions around sustainability are forward-looking, with commitments on clean energy, biodiversity, and waste management. These allow collaboration between the UK’s green technology firms and India’s rapidly growing clean energy sector.

Consumers in both countries will also feel the impact of the agreement. In the UK, Indian products such as textiles, ready-to-eat foods, and jewellery will become more accessible and affordable. Meanwhile, Indian shoppers will benefit from more competitive pricing and a wider variety of high-quality UK imports. Updated consumer protection rules in digital marketing will strengthen privacy and trust in online transactions.

From agreement to impact

With the agreement now in place, the focus shifts to execution. Parliamentary approvals, legal procedures, and transparent implementation roadmaps will be essential to turning intent into impact. Key next steps include finalising a Bilateral Investment Treaty, crafting targeted strategies for sectors like electric vehicles, fintech, and agritech, and ensuring SMEs have the tools and support to participate.

This is also a moment for business leaders to step forward. Early investments, cross-border partnerships, and innovation pilots will be critical in demonstrating the FTA’s full potential. Because today, trade is no longer just about exports and tariffs—it is about ecosystems, trust, and shared problem-solving. Agreements like this mark a shift in how countries collaborate. For those ready to look beyond short-term wins and build long-term capability, the road ahead offers more than growth. It offers reinvention.

(Anuj Chande is a partner at Grant Thornton UK and Pallavi Bakhru is a partner at Grant Thornton Bharat)