The India-UK free trade agreement (ALE, signed on Tuesday, May 6, 2025, after almost three years of negotiations, is one of the most complete free trade agreements ever concluded by India.
The FTA is likely to define a new reference for fair trade between two major economies.
In general, the United Kingdom in India, the ALE provides for prices and market access to various articles by the two countries. Under the agreement, India will reduce import duties on 90% of pricing lines, 85% of them become fully without a price within ten years.
Under the agreement, almost 99% of Indian exports will receive franchise access to the British market, covering almost all the commercial value between the two countries.
British products such as whiskey, gin, cars, cosmetics, medical devices, advanced machines and lamb will see significant prices. For example, prices on whiskey and gin will be reduced by 150% to 75% initially, and still reduced to 40% over the next ten years.
Automobile prices will be reduced by more than 100% to 10% as part of a specified quota system.
The agreement will stimulate the key sectors and open larger export opportunities for India, in sectors such as textiles, sea products, leather, shoes, sports products and toys, jewels and jewelry, engineering products, automotive parts and organic chemicals.
Exporters of the United Kingdom will have easier access to the Indian market for products such as cosmetics, aerospace components, medical equipment, salmon, electric machines, carbonated drinks, chocolate and cookies.
In the service sector, India will have improved access to the British market for its professionals, in particular in the IT, financial, professional and educational services sector.
The FTA includes provisions for easier movement of skilled workers, including contractual service providers, business visitors, investors, intra-company transfer and an independent professional.
There will be a three-year exemption from contributions to Social Security in the United Kingdom for Indian workers and their employers that I considered a great success. This will cause significant cost savings and increased competitiveness for Indian service providers.
The FTA should contribute USD 6.4 billion per year to the British economy by 2040, while increasing bilateral trade to more than 100 billion USD by 2030. The agreement should double the bilateral trade of its current value of around 60 billion USD.
The FTA also cements the complete strategic partnership of India-UK and is considered to be a foundation of a more in-depth collaboration in defense, technology, education and tourism.
The agreement also addresses non -tariff obstacles, guaranteeing a fluid trade in terms of goods and services and to prevent unjustified restrictions on exports. The agreement should not only attract foreign investments, but also stimulate national manufacturing and support the integration of the two countries in global value chains.
From the agreement, Indian consumers will benefit from the drop in prices on British products, while British buyers will see reduced prices and more variety in products such as clothing, shoes and food.
The agreement is also considered an important step in world trade, and likely to define a reference for India FTAs under negotiations with the EU, Australia and New Zealand.
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