What We Know — and Don’t Know — About the UK-India Trade Deal

Industry Group Welcomes UK-India Trade Deal, Despite Limitations

The U.K. and India have finalized a free trade agreement (FTA) that includes a range of tariff cuts and market access improvements — a deal broadly welcomed by industry, though not without reservations.

The Society of Motor Manufacturers and Traders (SMMT), representing the U.K.’s automotive sector, hailed the agreement as a positive step. However, the group cautioned that the final terms are likely to include compromises and may not guarantee unrestricted access for all British-made automotive products entering the Indian market.

As part of the pact, India will reduce import tariffs on a wide selection of U.K. goods, including cosmetics, aerospace components, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate, and biscuits. In exchange, the U.K. will cut tariffs on Indian exports such as clothing, footwear, and various food products — notably including frozen prawns, which the British government has highlighted.

Despite these mutual concessions, some tariffs will remain in place. Sectors such as dairy and milled rice are excluded from the agreement, as both countries opted to shield their respective domestic industries from foreign competition.

The government anticipates the trade deal will result in a 59.4 percent surge in U.K. exports to India, a gain valued at approximately £15.7 billion. In comparison, Indian exports to the U.K. are expected to rise by 25 percent, equating to £9.8 billion in added value.

Altogether, the new trade relationship is projected to increase overall bilateral trade by 38.8 percent, totaling £25.5 billion — equivalent to a modest 0.1 percent boost to the U.K.’s GDP by 2040. While this is a relatively small figure, especially compared to the estimated 4 percent economic loss resulting from the U.K. leaving the EU single market, it is slightly higher than gains from other recent FTAs, such as the 0.08 percent boost expected from the previous government’s deal with Australia.

India also secured key concessions in the deal, including changes to social security contributions for Indian workers in the U.K., a move that could benefit Indian companies operating internationally.