On 6 May 2025, the signing of the Free Trade Agreement (FTA) between India and the UK was announced after three years of negotiations.
The agreement covers goods and services, digital trade, government procurement, intellectual property, labour rights, gender equality, anti-corruption measures and environmental standards. The British government forecasts a £25.5 billion increase in bilateral trade and a £4.8 one in the country's GDP annually in the long term.
Mutual reduction of tariffs is also a key aspect of the FTA. India has agreed to reduce or completely eliminate import duties on 90% of products from the United Kingdom. A 85% of imports from UK are expected to become tariff-free within a decade. Tariffs on whisky from UK in India will be halved, from 150% to 75%, and after 10 years they are expected to fall to 40%. India will also drop car tariffs to 10%. In return, the UK promises to remove tariffs on 99% of goods from India, including clothing, footwear, food, jewellery and a wide range of manufactured products. Among the goods that will face tariff reductions are medical devices, electrical machinery and aerospace.
Major opportunities are also emerging for the plastics sector. These include India's entry into the £22.5 billion UK plastics market, a competitive edge for plastic from India over material from ASEAN countries and China, and encouragement for UK brands to use India-made packaging. The UK government is exempting 6.5% duty on Indian plastic products.
Aside from the opportunities, there are several challenges that both countries will need to overcome to maximise the benefits of cooperation. India needs to obtain United Kingdom Conformity Assessed (UKCA), Brand Reputation Compliance Global Standards (BRCGS), and ISO14001 certifications, improve the recyclability and biodegradability of its packaging, and establish partnerships with the UK's Fast Moving Consumer Goods (FMCG) and retail brands. UK buyers will need to consider the use of material from India in terms of scale and price, and sign long-term contracts to mitigate the risk of supply shortfalls.