The India-UK Free Trade Agreement (FTA), signed on July 24, 2025, is poised to create significant opportunities for both nations, particularly for India's labor-intensive sectors. The agreement aims to boost annual bilateral trade by $34 billion.

Duty-Free Access and Export Boost:

The FTA provides duty-free access to 99% of Indian exports to the UK, unlocking an estimated $23 billion in opportunities for Indian businesses. This will significantly benefit key sectors, including:

• Textiles: Tariffs as high as 12% have been reduced to zero, boosting India's competitiveness against regional peers like Bangladesh and Cambodia.
• Leather and Footwear: The FTA gives Indian MSMEs a strong advantage over countries like Bangladesh, Cambodia, and Pakistan. India's leather sector is projected to gain an additional 5% market share in the UK within the next two years.
• Gems and Jewellery: With tariff relaxations, India's gems and jewellery sector is expected to double exports to the UK in the next 2-3 years. The UK currently imports around $3 billion worth of jewellery annually, presenting significant potential for Indian exporters.
• Agriculture and Marine Products: The agreement ensures duty-free exports of nearly 95% of agricultural products and zero duty on 99% of marine exports, boosting incomes for farmers and fisherfolk.
• Other Labour-Intensive Sectors: The FTA will also benefit sectors like toys, auto parts, furniture, and sports goods, enhancing the competitiveness of Indian goods in the UK market.

Broader Economic Impact:

Beyond specific sectors, the India-UK FTA is expected to have a wide-ranging positive impact:

• Increased Exports: UK officials estimate the deal will increase UK exports to India by almost 60% over the long term.
• Job Creation: The agreement is projected to create thousands of jobs in both countries.
• Investment and Growth: The FTA is expected to attract new investments and drive economic growth in both India and the UK. The UK Prime Minister will welcome almost £6 billion of new investment and export wins for Britain, creating over 2,200 UK jobs as Indian firms expand their UK operations.
• Advantage for MSMEs: The FTA provides duty-free access to the UK's $23 billion market, giving Indian Micro, Small, and Medium Enterprises (MSMEs) a strong advantage in labor-intensive sectors.

Additional Benefits:

The FTA also includes provisions for:

• Services Sector: The UK has committed to greater access in IT, financial, educational, and professional services.
• Professionals: Indian professionals, including chefs, yoga instructors, and musicians, will gain temporary work access in the UK.
• Social Security: A three-year exemption on UK social security payments for Indian workers and their employers is projected to save nearly Rs 4,000 crore annually.
• Digital Trade: The Digital Trade Chapter focuses on building a secure and open digital ecosystem through cybersecurity provisions and consumer protections, helping youth explore careers in the digital economy.
• Intellectual Property: The agreement includes a chapter on intellectual property, ensuring UK financial services companies are treated equally with domestic suppliers. The deal will not hinder India's provision of generic drugs.
• Government Procurement: British firms can bid for federal-level contracts in India.

Overall, the India-UK FTA represents a significant step towards deeper economic integration between the two nations. By eliminating tariffs and reducing trade barriers, the agreement is expected to boost trade, investment, and job creation, particularly in India's labor-intensive sectors.