India-UK Free Trade Agreement 2025

UK-India Free Trade Agreement (FTA) 2025: An Overview

India and UK have concluded talks on Free Trade Agreement which ended after a series of negotiations that started in January 2022 to boost ties between the two Countries. The New Trade Agreement which was signed on May 6, 2025 aims at doubling the bilateral trade from USD 60 billion at present to 120 billion by 2030.

The trade agreement has enabled access to Indian goods and services to UK market on a large scale, while UK firms will also benefit in Indian Market.

Benefits for Indian Economy in Goods Sector

India-UK Free Trade agreement has offered great opportunities for increasing the bilateral trade between the two countries . It eliminates import duties on 99% of Indian Goods entering UK, while India still safeguards its sensitive sectors.

It has boosted Indian exports of goods in all sectors, for example Industrial goods from India will enter the UK market at ‘Zero duty’. It also covers sectors leather, footwear, textile and clothing, gems and jewellery, base metals, furniture, sports goods, transport/auto components, chemicals, wood/paper, mechanical/electrical machinery, minerals. At present, these sectors attract duty in the range of 4-16 per cent in the UK.

Import of Alcohol and Automobiles from UK.

In the India- UK Free Trade Agreement, alcohol and automobiles are the two crucial sectors, which has been focused by the UK Government.
Now, there will lower duties on imports of Scotch whisky, luxury automobiles, and electric vehicles. However, some high-profile items like Range Rovers will not immediately benefit from tariff cuts.

Import of Scotch, whisky and gin from the UK will be halved to 75 per cent initially and 40 per cent by the 10th year. At present, it is 150 per cent. Scotch whisky constitutes only 2.5 per cent of the total whisky market. The tariff reduction is over a longer period of time (10 years). The incremental increase in imports would not significantly affect the domestic market.Tariffs on UK autos will be reduced from over 100 per cent to 10 per cent under quotas on both sides benefit.

Safeguards in sensitive sectors by the Indian Government.

1.Intellectual Property Rights (IPR)

India has firmly resisted provisions that would grant extended patent terms or data exclusivity. Such measures could hinder the production of affordable generic medicines, a cornerstone of India’s pharmaceutical industry. The government has maintained that it will not compromise on these aspects, emphasizing the importance of accessible healthcare.

2.Data Protection and Digital Policy

Without a comprehensive national digital policy in place, India has secured carve-outs in the FTA concerning data localization and cross-border data transfers. This approach allows India to retain regulatory flexibility in the evolving digital landscape.

3. Government Procurement

The FTA includes provisions that protect India’s public procurement policies, which favor small and medium-sized enterprises (SMEs). These safeguards ensure that domestic policies supporting the growth of SMEs are not undermined by international trade obligations.

4.Automotive Sector

While the FTA reduces tariffs on UK automobiles, India has negotiated a phased implementation over 10–15 years. This gradual approach allows the domestic automotive industry to adjust and remain competitive.

5.Agriculture and Dairy

India has secured exemptions from tariff reductions on sensitive agricultural products, including dairy items. This protection helps shield local farmers from potential market disruptions caused by increased imports.

6.Professional Mobility

The FTA allows for the temporary movement of Indian professionals to the UK, but with limitations. Only 1,800 additional visas are granted annually, and the agreement excludes spouses, balancing the need for skilled labor with domestic employment considerations.

Sectors which will enter the UK Market at NIL Import duty

Leather
Footwear
Textile and Clothing
Gems and Jewellery
Base Metal
Furniture
Sport Goods
Sport Goods
Transport/ Auto component
Chemicals
Wood/paper
Mechanical/electrical machinery
Minerals

Conclusion

The relaunch of the UK-India FTA in early 2025 is a significant moment in the evolving relationship between these two nations. As both sides work toward the finalization of the deal, the UK and India stand to benefit from a closer, more robust economic partnership—one that could shape the future of trade between the two countries for years to come.

While the detailed provisions of the agreement—including specific tariff reduction schedules, rules of origin, import quotas, services covered, and the nature of commitments therein—are still pending, stakeholders should proactively prepare to capitalize on these opportunities as the agreement progresses toward implementation.”

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