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UK-India FTA reached

The UK and India agreed a landmark Free Trade Agreement (FTA) yesterday, aimed at reducing tariffs and boosting bilateral trade, which has been predicted could add as much as £4.8 billion to the UK economy.

Image courtesy Department for Business and Trade

Indian tariffs will be slashed, locking in reductions on 90% of tariff lines, with 85% of these becoming fully tariff-free within a decade.

Goods with reduced tariffs, which can open markets and make trade cheaper for businesses and Indian consumers, include aerospace and electrical machinery.  

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The deal is expected to increase bilateral trade by £25.5 billion, UK GDP by £4.8 billion and wages by £2.2 billion each year in the long run.

UK businesses gain a competitive edge over international competitors when entering India’s enormous market as it gets even bigger, forecasted to become the third largest global economy within three years.

Business and Trade Secretary Jonathan Reynolds and Indian Commerce Minister Piyush Goyal held final talks in London last week after relaunching negotiations only two months ago. Negotiators across both sides have worked around the clock since February to get this deal done, which is the biggest and most economically significant bilateral trade deal the UK has done since leaving the EU and the best deal India has ever agreed.

Prime Minister Keir Starmer said: "We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK’s economy, putting more money in working people’s pockets.  

"The UK has become an attractive place to do business. Today we have agreed a landmark deal with India - one of the fastest growing economies in the world, which will grow the economy and deliver for British people and business.  

"Strengthening our alliances and reducing trade barriers with economies around the world is part of our Plan for Change to deliver a stronger and more secure economy here at home.   

Business and Trade Secretary Jonathan Reynolds said: "This government’s number one mission is growing the economy as part of our Plan for Change so we can put more money in people’s pockets.  

"By striking a new trade deal with the fastest-growing economy in the world, we are delivering billions for the UK economy and wages every year and unlocking growth in every corner of the country, from advanced manufacturing in the North East to whisky distilleries in Scotland.

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"In times of global uncertainty, a pragmatic approach to global trade that provides businesses and consumers with stability is more important than ever."

At least 1.9 million people with Indian heritage call the UK their home and striking this deal will strengthen the vital partnership between our two democracies.

The benefits for UK businesses and consumers under this deal are massive, with wins across an array of sectors, including aerospace and advanced engineering.  

Barriers to trading will be dropped, with India agreeing to reduce tariffs on a whole host of products including whisky, medical devices, advanced machinery and lamb, making UK exports more competitive. Based on 2022 trade alone, this amounts to India cutting tariffs worth over £400 million when the deal comes into force, which will more than double to around £900 million after 10 years.  

Exporting to this huge market will be easier than ever before thanks to India agreeing to release goods as quickly as possible after arrival at customs, work with the UK on one streamlined portal for trade and publish customs procedures and laws online in English. In addition, new digital commitments will support electronic contracts and transactions. These changes could particularly support small and medium-sized businesses, making it easier for them to enter the Indian market.

UK headquartered Arup, an employee-owned business providing engineering and technical and advisory services dedicated to sustainable development (with around 18,000 members) is a trusted partner of the government in India and has delivered a wide range of projects including the Bangalore international airport, the iconic Statue of Unity and the Indian Railways Station Redevelopment programme.

Paula Walsh, Managing Director, UK, India, Middle East and Africa, said: "Arup supports the UK–India Free Trade Agreement and the powerful role this will play in boosting investment, jobs and growth. It is an important opportunity to deepen our collaboration with partners in India, sharing UK skills and technical expertise to deliver resilient and future-focused solutions across transport, energy and the built environment.

"We are proud to have been part of a recent delegation to India, sharing renewable energy expertise with government representatives and look forward to continuing this critical partnership."

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