The recently signed India-UK Free Trade Agreement (FTA) is poised to deliver significant benefits to India's youth, Micro, Small and Medium Enterprises (MSMEs), and startups, marking a new era of economic partnership between the two nations. The agreement, finalized after years of negotiations, aims to enhance trade, drive inclusive growth, and create opportunities across various sectors.

Key Benefits and Strategic Impact

The India-UK FTA, signed on July 24, 2025, offers comprehensive economic gains for India across goods, services, and labor mobility. It is expected to boost bilateral trade by $34 billion a year from 2040.

• Market Access: The agreement ensures comprehensive market access for goods across all sectors, covering nearly all of India's export interests. Approximately 99% of Indian exports to the UK will now be duty-free, benefiting nearly all trade value. The UK will reduce tariffs on 90% of its tariff lines, with 85% becoming zero-duty within 10 years.
• Boost to Bilateral Trade: UK exports to India are projected to grow by nearly 60%, contributing an additional £15.7 billion by 2040. Overall bilateral trade is expected to surge by 39%, adding £25.5 billion annually compared to trade levels without the agreement.
• Services and Mobility Provisions: The FTA includes chapters on services, innovation, and intellectual property, offering enhanced mobility for Indian professionals. A Double Contribution Convention Agreement will prevent Indian workers in the UK from paying into both Indian and British social security systems. This exemption from social security payments will last for three years, boosting competitiveness and earnings for Indian workers.
• Tariff Reductions: The agreement removes or reduces tariffs on 90% of tariff lines, covering 92% of India's goods imports from the UK in 2022 after staging (up to 10 years). India will also cut levies on 90% of British products sold in the country. Within a decade, 85% of British products sold will become tariff-free in India. Import duties on UK exports are estimated to reduce by around £400 million as soon as the FTA comes into force, and are expected to double to approximately £900 million after 10 years.
• Safeguard Measures: India has secured the right to impose temporary trade safeguards if a sudden spike in British imports causes or threatens serious harm to domestic industries. Provisional safeguards can be enforced for up to 200 days in emergencies.

Impact on Key Sectors and States

The FTA is expected to benefit labor-intensive industries like marine, textiles, chemicals, base metals, and processed foods. Tariffs on processed foods will drop from 70% to zero, while tea, coffee, spices, rubber, and plastics will gain free access. Key states like Maharashtra, Gujarat, and Tamil Nadu are poised to reap substantial economic benefits. Maharashtra will export more engineering goods and medicines. Gujarat will see growth in pharma and seafood exports. Tamil Nadu's textile and leather industries will benefit.

Opportunities for Youth, MSMEs, and Startups

The India-UK FTA is designed to make trade more inclusive, providing new access to global value chains for women and youth entrepreneurs, farmers, fishermen, startups, and MSMEs. These groups will be supported by provisions that encourage innovation, promote sustainable practices, and reduce non-tariff barriers. The agreement opens global doors for Indian startups with duty-free exports, capital access, talent mobility, and digital trust infrastructure, reshaping innovation ecosystems. The FTA will unlock new opportunities for exports, innovation, and prosperity, especially in rural and semi-urban India. The mobility framework includes 1,800 annual visas for Indian professionals and entrepreneurs.

Overall Economic Growth

The UK's gross domestic product (GDP) is estimated to increase by 0.13%, equivalent to £4.8 billion, and India's GDP by 0.06%, equivalent to £5.1 billion per year in the long run. By 2035, the UK is projected to remain the world's sixth-largest economy, and India is projected to be the third.

The India-UK FTA represents a significant step towards strengthening the relationship between the two countries, building on existing initiatives such as the Technology Security Initiative and the UK-India Comprehensive Strategic Partnership.