NEW DELHI: A comprehensive trade agreement between India and the UK took effect on Wednesday, slashing tariffs on 99 percent of Indian exports and creating new opportunities for labor-intensive sectors in the world’s most populous country.
The India-UK Comprehensive Economic and Trade Agreement was signed last July after talks stalled for years following the launch of negotiations in 2022.
The pact removes or reduces tariffs on about 99 percent of Indian exports to the UK and 90 percent of UK imports into India, making it one of Delhi’s “most comprehensive” free trade agreements yet, Commerce Minister Piyush Goyal said.
“The India-UK FTA creates unprecedented opportunities for our textiles, leather, gems & jewelery, engineering goods, marine products, chemicals, processed foods, MSMEs, farmers and manufacturers,” he said on X.
“It also opens new frontiers for our IT, professional, financial, education and business services sectors, while expanding mobility for Indian talent.”
In 2025, bilateral trade was worth about £48 billion ($64 billion), British government data showed, as the UK accounts for about 3 percent of India’s exports — valued at more than $14 billion in the 2024-25 fiscal year — and is ranked sixth among India’s export destinations.
The Indian government aims to double bilateral trade to $100 billion by 2030, while the pact is also expected to provide better UK market access for Indian medical professionals and easier global expansion for Indian startups.
The services part of the deal eases the movement of professionals — from independent practitioners such as yoga instructors, musicians and chefs, to business visitors, investors, contractual service providers and intra-corporate transferees. It also extends work and residence rights to their partners and dependent children.
The FTA also has “the potential to transform bilateral trade from a traditional goods-based relationship into a technology-driven strategic economic partnership,” said Rajeev Juneja, president of the PHD Chamber of Commerce and Industry in New Delhi.
“India’s growing competitiveness in manufacturing, combined with the UK’s strengths in innovation and advanced technologies, creates significant opportunities for expanding exports, attracting investment and integrating into global value chains.”
According to Anupam Manur, professor of economics at the Takshashila Institution, the FTA will immediately benefit labor-intensive sectors.
“The immediate winners are India’s labor-intensive exporters, such as textiles, leather, footwear, marine, gems, which now sit inside the UK tariff wall while Bangladesh, Vietnam and China sit outside it,” he told Arab News.
The agreement showcased India’s ability to secure a significant deal with an advanced economy and one of the world’s largest premium consumer markets.
“The comprehensive nature of the trade deal will deepen the partnership, which will encourage higher investment and people flows between the two countries,” Manur said.
“The tariff cuts are the headline, but the durable significance is that India has shown it can conclude a deep, comprehensive agreement with a major advanced economy.”
