ELP Update: Conclusion of the India-UK FTA

After 14 rounds of negotiations that began in 2022, India and the United Kingdom (UK) have announced the conclusion of negotiations on the India-UK Free Trade Agreement (India-UK FTA) on May 6, 2025.[1]

While the India-EFTA Trade and Economic Partnership Agreement (TEPA) marked India’s first major free trade agreement with a group of developed countries, the India-UK FTA has been described by India’s Commerce Minister Piyush Goyal as “the most comprehensive trade deal India has negotiated” and the “gold standard” for future trade engagements. [2]

Notably, the announcement of the FTA’s conclusion comes at a time of heightened uncertainty in global trade and reflects both countries’ commitment to deepening economic cooperation and jointly addressing global challenges.[3] According to the Indian government, bilateral trade between India and the UK – currently valued at USD 60 billion – is expected to double by 2030. [4]

As India continues to negotiate FTAs with other key partners like the EU, Australia, and the US, it views the India-UK FTA as a potential benchmark for crafting fair, ambitious, and modern trade agreements globally.

While the text of the India-UK FTA is expected within three months following the legal vetting and signing of the FTA, the key outcomes of the negotiations based on the press reports and the official press releases from the Indian and the UK governments are as follows:

Trade in Goods. The India-UK FTA accords tariff elimination on approximately 99% of the tariff lines covering almost 100% of the trade value between the two nations[5], with key sectors benefiting from immediate or phased tariff reductions. Some of the key highlights are:

• Indian exports to the UK will see tariff elimination, with important sectors like textiles, leather, footwear, marine products, gems, jewellery, and engineering goods benefiting.
• UK whisky and gin tariffs, currently at 150%, will be reduced to 75% immediately, with a staged reduction to 40% by the tenth year.[6]
• Automobile tariffs will include tariff rate quotas (TRQs) for both (i) Indian electric and hybrid vehicles to the UK, and (ii) UK automobiles, particularly electric vehicles, to India.[7]
• Seafood and agricultural exports from India, including shrimp, frozen fish, rice and mangoes, will see phased tariff reductions.[8]
• UK cosmetics and toiletries, currently facing Indian tariffs of 10-20%, will benefit from immediate or staged tariff reductions, including a halving of duties on perfumes and cologne.[9]

Trade in Services. The India-UK FTA enhances market access for services, creating greater operational flexibility for businesses in both countries. It allows UK businesses to operate in India with fewer restrictions, while also opening up new opportunities for Indian professionals and service providers, particularly in high-demand sectors like IT and professional services. Some of the key highlights are:

• Reduced restrictions for UK service providers in sectors like telecommunications, environmental services, and construction, with no requirement for a local presence in India.[10]
• Eased mobility for Indian professionals (e.g., IT experts, yoga instructors, chefs, and musicians), with provisions for intra-corporate transferees to work in the UK.[11]
• Market access for skilled Indian professionals: Enhanced opportunities for Indian service providers, aligning with the UK’s advanced digital infrastructure.[12]
• Digital services: Both countries have committed to facilitating digitally delivered services such as architecture, engineering, computing, and telecommunications.[13]

Intellectual Property Rights. The India-UK FTA introduces an advanced intellectual property (IP) chapter that enhances protections and ensures alignment with international standards. It strengthens safeguards for patents, copyrights, trademarks, and geographical indications (GIs), while committing both nations to improve patent procedures and provide greater transparency. Some of the key highlights[14] are:

• Improvements to patent procedures in India, including reduced administrative burdens, faster processes, and increased transparency.
• Copyright protection focused on public performance rights and artist resale rights to protect creators and rights holders.
• Expanded GI protections for the UK, extending beyond wines and spirits without requiring changes to UK domestic legislation.

Non-tariff Barriers. The India-UK FTA incorporates strong disciplines to tackle non-tariff barriers through chapters on Sanitary and Phytosanitary (SPS) measures, Technical Barriers to Trade (TBT), and Good Regulatory Practices (GRP). These provisions aim to ease market access, reduce trade friction, and align regulatory approaches while preserving public health and safety standards. Some of the key highlights[15] are:

• SPS chapter ensures transparent approval processes, mutual recognition of regional conditions, and the principle of equivalence to facilitate agri-food trade.
• TBT provisions promote science-based, non-discriminatory regulations, reducing compliance costs while maintaining product safety.
• Animal welfare and antimicrobial resistance cooperation encouraged under the SPS commitments.
• GRP chapter commits both countries to transparent rulemaking, public access to the relevant regulations, and institutional dialogue to improve regulatory coherence.

Government Procurement and State-owned Enterprises. The India-UK FTA introduces key disciplines on government procurement (GP) and State-Owned Enterprises (SOEs), aiming to foster open, competitive, and transparent market conditions. These chapters mark a significant step for India in aligning with global best practices, while also offering reciprocal benefits to UK suppliers. Some of the key highlights[16] are:

• GP chapter grants legally guaranteed access to UK suppliers for contracts from Indian central government entities and selected SOEs; similar access is expected for Indian firms in the UK’s procurement market.
• Procurement supplier classification criteria specified to improve procedural clarity and transparency, addressing domestic preference rules.
• SOEs chapter commits both sides to ensuring fair competition through commercially oriented SOE conduct and includes mechanisms for addressing concerns and promoting corporate governance cooperation.

Digital Trade. The India-UK FTA’s digital trade chapter aims to modernise and streamline digital commerce between India and the UK, enhancing trust, efficiency, and innovation for their businesses and consumers. It introduces rules that promote open digital markets while safeguarding consumer rights and commercial interests. Some of the key highlights[17] include:

• Supports electronic contracts and transactions, reducing red tape especially for SMEs.
• Prohibits forced transfer of source code, ensuring greater confidence for firms in both jurisdictions.
• Promotes online consumer protection, including through measures to tackle unsolicited commercial messages, or spam.
• Includes provisions on cross-border data flows and data localisation, enabling future bilateral negotiations aligned with evolving international practices.
• Encourages UK-India collaboration on emerging technologies, fostering innovation through digital trade.

Sustainability. The India-UK FTA incorporates dedicated chapters on labour and environment, building on commitments India has made in recent FTAs like the India-United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA) and the India-EFTA TEPA. These chapters reaffirm both countries’ commitment to inclusive growth and sustainable development. They aim to promote responsible business conduct, fair labour standards and cooperation on priorities. Some of the key highlights[18] are:

• Labour chapter upholds ILO-aligned commitments on freedom of association and prohibition of forced labour, with provisions for effective labour law enforcement and improved workplace conditions.
• Environment chapter supports trade in environmental goods and services, reinforces Paris Agreement goals, encourages clean energy transition, and promotes cooperation in sustainable resource use, green technologies, and the circular economy.

Double Contribution Convention. A key financial benefit comes from the exemption of Indian workers and their employers from UK social security contributions for up to three years under the Double Contribution Convention which has been concluded alongside the FTA. It is likely to enhance the competitiveness of Indian service providers in the UK, while providing tangible monetary benefits to Indians temporarily working in the UK.[19]

The India-UK FTA represents a landmark moment in foreign and economic relations between the two countries, marking one of the most comprehensive trade deals negotiated by India in the current geopolitical scenario. By addressing both tariff and non-tariff barriers across goods, services, investment, digital trade, and intellectual property, the India-UK FTA lays the foundation for a more predictable, transparent, and mutually beneficial trade between the two. It also reflects a strategic effort by both nations to diversify trade partnerships, deepen economic engagement and support sustainable growth through cooperation grounded in rules.

The India-UK FTA is expected to boost market access for important export sectors, particularly in a period of uncertainty, enhance regulatory cooperation, and improve ease of doing business in India for UK firms. On the one hand, it offers a platform for Indian exporters to strengthen their export competitiveness in labour-intensive goods and technology-intensive services sectors in trade with the UK. On the one hand, it provides UK improved access to one of the world’s fastest growing developing economies, supporting its global trade diversification post-Brexit. Moreover, the India-UK FTA’s emphasis on sustainability, gender parity and digital integration also signals a forward-looking approach to trade showcasing alignment between India and UK on broader developmental and climate goals.

Reports have indicated that the vetting and signing of the India-UK FTA are expected to take around three months.[20] Following this, an additional twelve months may be spent to prepare for ratification of the FTA, including drafting of necessary legislation and parliamentary engagement, particularly in the UK.[21] Meanwhile, negotiations on concluding the India-UK Bilateral Investment Treaty are likely to continue, with both sides aiming to finalise the treaty by the end of the year.[22] Other trade concerns such as the UK’s proposed Carbon Border Adjustment Mechanism law also remain and these may become topics for future bilateral engagement, to ensure that benefits granted under the FTA are not undermined through non-tariff barriers.[23]

[1] Ministry of Commerce & Industry, Press Release, dated May 6, 2025, available at URL: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2127321 (accessed on May 9, 2025)

[2] Ravi Dutta Mishra, ‘Most comprehensive trade deal India has negotiated, to be the template for future engagements: Commerce Ministry’, dated May 7, 2025, available at URL: https://indianexpress.com/article/business/india-uk-free-trade-deal-commerce-ministry-9986413/ (accessed on May 9, 2025)

[3] Ministry of Commerce & Industry, Press Release, dated May 6, 2025, available at URL: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2127321 (accessed on May 9, 2025)

[4] Ibid

[5] Id

[6] Department of Business & Trade, ‘UK-India trade deal: conclusion summary’, dated May 6, 2025, available at URL: https://www.gov.uk/government/publications/uk-india-trade-deal-conclusion-summary/uk-india-trade-deal-conclusion-summary (accessed on May 9, 2025)

[7] Kirtika Suneja, ‘FTA perks: UK gets to sell 22,000 premium EVs in India’, dated May 8, 2025, available at URL: https://economictimes.indiatimes.com/news/economy/foreign-trade/fta-perks-uk-gets-to-sell-22000-premium-evs-in-india/articleshow/120975018.cms (accessed on May 9, 2025).

[8] Times of India Business Desk, ‘India, UK forge Free Trade Agreement; PM Modi terms it ‘historical milestone”, dated May 6, 2025, available at URL: https://timesofindia.indiatimes.com/business/india-business/india-uk-forge-free-trade-agreement-pm-modi-says-historic-milestone/articleshow/120933972.cms (accessed on May 9, 2025)

[9] Department of Business & Trade, ‘UK-India trade deal: conclusion summary’, dated May 6, 2025, available at URL: https://www.gov.uk/government/publications/uk-india-trade-deal-conclusion-summary/uk-india-trade-deal-conclusion-summary (accessed on May 9, 2025)

[10] Ibid

[11]Ministry of Commerce & Industry, Press Release, dated May 6, 2025, available at URL: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2127321 (accessed on May 9, 2025)

[12] Ibid

[13] Id

[14] Department of Business & Trade, ‘UK-India trade deal: conclusion summary’, dated May 6, 2025, available at URL: https://www.gov.uk/government/publications/uk-india-trade-deal-conclusion-summary/uk-india-trade-deal-conclusion-summary (accessed on May 9, 2025)

[15] Ibid

[16] Id

[17] Id

[18] Id

[19] Surbhi Gloria Singh, ‘India-UK FTA: How Indian techies will save on salary for three years’, dated May 8, 2025, available at URL: https://www.business-standard.com/immigration/india-uk-fta-how-indian-techies-will-save-on-salary-for-three-years-125050701112_1.html (accessed on May 9, 2025)

[20] Aanchal Magazine and Ravi Dutta Mishra, ‘India–UK trade deal text expected in 3 months; No MIP on UK Whisky: Official’, dated May 9, 2025, available at URL: https://indianexpress.com/article/business/india-uk-trade-deal-text-expected-in-3-months-no-mip-on-uk-whisky-official-9991690/ (accessed on May 9, 2025)

[21] Rishabh Bhatnagar, ‘India-UK FTA Likely To Take Effect In A Year; Centre Mulls Alternatives to Foreign Carbon Tax: Sources’, dated May 8, 2025, available at URL: https://www.ndtvprofit.com/economy-finance/india-uk-fta-likely-to-take-effect-in-a-year-centre-mulls-alternatives-to-foreign-carbon-tax-sources (accessed on May 9, 2025)

[22] Sweta Goswami, ‘India-UK FTA done and dusted but bilateral investment treaty still pending’, dated May 7, 2025, available at URL: https://www.moneycontrol.com/news/business/economy/india-uk-fta-done-and-dusted-but-bilateral-investment-treaty-still-pending-13015363.html (accessed on May 9, 2025)

[23] Rishabh Bhatnagar, ‘India-UK FTA Likely To Take Effect In A Year; Centre Mulls Alternatives to Foreign Carbon Tax: Sources’, dated May 8, 2025, available at URL: https://www.ndtvprofit.com/economy-finance/india-uk-fta-likely-to-take-effect-in-a-year-centre-mulls-alternatives-to-foreign-carbon-tax-sources (accessed on May 9, 2025)