India and the UK target to double trade by 2030 with FTA

Prime Minister of India Narendra Modi and Prime Minister of the United Kingdom Keir Starmer on Tuesday (May 6, 2025) announced the conclusion of the India–UK Free Trade Agreement (FTA).

“This forward-looking Agreement is aligned with India’s vision of Viksit Bharat 2047 and complements the growth aspirations of both countries,” reads the Ministry of Commerce & Industry release.

The FTA takes place in the backdrop of growing economic relations between India and the UK as exemplified in the bilateral trade of about $60 billion, which is projected to double by 2030.

Prime Minister Modi stated in his social media post on X (formerly Twitter), “In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies.”

The FTA ensures comprehensive market access for goods across all sectors, covering all of India’s export interests. India will gain from tariff elimination on about 99% of the tariff lines, covering almost 100% of the trade value.

It reads, “The FTA with the UK is a modern, comprehensive and landmark agreement which seeks to achieve deep economic integration along with trade liberalisation and tariff concessions.”

The FTA provides a positive impact on manufacturing across labour and technology-intensive sectors and opens up export opportunities for sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery and other important sectors such as engineering goods, auto parts and engines and organic chemicals. This will substantially improve Indian goods' competitiveness in the UK vis-a-vis other countries.

India has ensured that non-tariff barriers are suitably addressed to ensure free flow of goods and services and that they do not create unjustified restrictions to India’s exports.

The FTA seeks to promote good regulatory practices and enhance transparency that are in sync with India’s own focus on domestic reforms to enhance the ease of doing business.

As two leading democracies and global innovation hubs, India and the UK reaffirm their commitment to strengthening economic cooperation and working together to address global challenges. The India–UK FTA sets a new benchmark for fair, ambitious, and modern trade agreements worldwide.

Meanwhile, the UK government's announcement of the FTA mentioned that there have been significant challenges for UK businesses seeking to access the Indian market.

“India has the highest average tariffs of any G20 economy, with some products facing duties above 100%. It is ranked as the eighth most restrictive services market by the Organisation for Economic Co-operation and Development (OECD) and has an uncertain regulatory environment. Risk and cost have historically hindered UK companies looking to move or expand into India,” it reads.

As a result of this deal, UK GDP is expected to increase by £4.8 billion (0.1%) each and every year in the long term.

Iconic UK products that are sold around the world will benefit from cut tariffs into India. This includes tariff reductions on products such as cosmetics, whiskies, as well as on other agri-food products such as gin, soft drinks, and lamb.

Lauding the deal, Sudhir Sekhri, Chairman, Apparel Export Promotion Council (AEPC), said, “This landmark free trade agreement between India and the UK is expected to boost ready-made garments (RMG) exports and help in the employment generation. Against the backdrop of demand contraction in major economies, Russia-Ukraine conflict, Israel-Hamas war, American reciprocal tariffs and Chinese belligerence, there was uncertainty and disruption impacting the global trade adversely.”

“This deal has come as a boon, removing immediately the tariff disadvantage of 9.6% and making us competitive in the UK market. Now the Made in India RMG will be cheaper on UK shelves and we will be at par with some of our major competitors who enjoyed duty-free access in the UK market,” Chairman AEPC added.

Further, Sekhri noted that, “India is the 4th largest supplier of garments with 6% share of the total RMG import of the UK. The RMG exports to the UK from India grew by 8% between April – March 2024-25 compared to April March 2023-24. The total RMG exports to the UK amounted to 1.4 billion USD during the same period. With this deal in place, India is all poised to double the RMG exports to the UK in the next three years,” he said.

China has remained the top supplier of RMG to the UK with 25% share in 2024. Bangladesh and Turkey have a share of 20% and 8%, respectively. The top products imported by UK from India includes (i) T-shirts, singlets and other vests of cotton, knitted or crocheted; (ii) Women's or girls' dresses of cotton; (iii) Babies' garments and clothing accessories of cotton, knitted or crocheted, Chairman AEPC informed.

Ashok Chandak, President, IESA and SEMI India, called it a timely catalyst for boosting India's image and business opportunities globally in multiple sectors

“The services sector will also benefit significantly, with growth in design, testing, and embedded software, driven by joint R&D and collaboration—leveraging the UK’s design strengths and India’s engineering talent thereby helping start-ups and innovators." By reducing tariffs on components, raw materials, and capital equipment, it lowers production costs and enhances the export potential of 'Made in India' products,” he said.

He added, " It facilitates skilled talent exchange, strengthens supply chain resilience, and promotes green electronics collaboration. Importantly, it sets a benchmark for future trade agreements, signalling India’s commitment to align with like-minded democracies and boosting its negotiating position in India’s core sectors and also high-tech and strategic sectors globally."

The engagement builds upon the discussions held between the two Prime Ministers on the sidelines of the G-20 Summit in Rio de Janeiro, Brazil, in November 2024. Following the meeting between the two Prime Ministers, intense FTA negotiations resumed in February 2025, marked by several engagements between the Commerce and Industry Minister Piyush Goyal and the U.K. Secretary of State Jonathan Reynolds and their teams.

Goyal stated, “This Agreement sets a new benchmark for equitable and ambitious trade between two large economies. It will benefit Indian farmers, fishermen, workers, MSMEs, startups and innovators. It brings us closer to our goal of becoming a global economic powerhouse. This FTA is not only about goods and services, but also about people, possibilities and prosperity. It protects our core interests while opening doors to India’s greater participation in global value chains”.