The India-UK Free Trade Agreement (FTA), officially signed in July 2025 after negotiations from 2022 to 2025, is viewed by British peers as a strategically vital instrument for bolstering rules-based trade. A report by the House of Lords International Agreements Committee acknowledges the deal's significance amidst a complex global trade environment, highlighting that the FTA offers stability for businesses and a platform for ongoing strategic cooperation between the two nations.
The FTA is projected to boost the UK economy by £4.8 billion annually by 2040. By eliminating tariffs on 99% of Indian tariff lines and reducing tariffs on 90% of UK tariff lines, the agreement is set to transform economic collaboration between the two countries. India will remove or reduce tariffs, or pre-existing zero tariffs, on 90% tariff lines, which will cover 92% of existing goods imports from the UK (based on 2022 trade). Based on this trade alone, this amounts to India cutting tariffs worth around £400 million, which will more than double to around £900 million after 10 years.
Key sectors in India that are likely to benefit include textiles, leather, agriculture, IT services, jewelry, engineering goods, auto parts, engines, and organic chemicals. Meanwhile, in the UK, industries such as beverages, automotive, advanced manufacturing, and life sciences stand to gain. The agreement also supports professional mobility in services.
While the agreement is a landmark achievement, the House of Lords International Agreements Committee has pointed out that the benefits for UK goods exporters may take time to materialize, making the agreement a longer-term strategic investment. In contrast, Indian exporters will have immediate access to the UK market. The committee also noted the exclusion of key UK interests, such as legal services and investment protection, from the agreement. Concerns have also been raised regarding non-tariff barriers, particularly Indian quality control orders, which could potentially undermine the agreement's objectives.
Lord Goldsmith, Chair of the House of Lords International Agreements Committee, acknowledged the deal as a landmark achievement with a key strategic partner amidst geopolitical turbulence. He welcomed its compliance with World Trade Organization rules, especially given current challenges to the rules-based international order.
The UK government views India as an important partner, emphasizing that the FTA presents an opportunity to deepen the relationship between the two countries. As one of the fastest-growing economies, India holds a pivotal position in the Indo-Pacific region. The FTA aims to enhance the trade relationship, potentially increasing UK exports by up to £16.7 billion by 2035.
The agreement reflects a shared vision and political will to establish a balanced, modern, and rules-based economic and trade partnership. The India-EU trade deal, along with India's FTA with the UK and the EFTA effectively opens up the entire European market for Indian businesses, exporters and entrepreneurs. It is also aligned with India's vision of "Viksit Bharat 2047,” positioning India as a dynamic, trusted, and forward-looking partner on the global stage.