FTA And Beyond: Would Renewed India-UK Ties Prove To Be A Two-Way Street?

Indians are now part of the British ecosystem, making big investments -- for millions of Indians will be a redemption of sorts. From a business viewpoint, India’s micro, small, and medium enterprises (MSMEs) sector stands to gain in a big way.

What FTA Means

FTA provides duty-free access to approximately 99 per cent of Indian exports by value.

This supports MSMEs and jobs in textiles, marine products, leather, footwear, sports goods, toys, gems, and jewellery. It also opens opportunities in engineering goods, automobile parts, and organic chemicals.

Stronger trade ties are expected to attract greater two-way investments. This will boost engagements from UK-based companies in India, while Indian investments in the UK will also increase, creating jobs in both countries.

India-UK links in biomanufacturing will help MSMEs scale from lab to pilot to production. They unlock investment and create skilled shop floor and lab employment.

Expanding Opportunities

Joint workstreams in semiconductors, artificial intelligence (AI), and 6G will expand research pipelines and industry placements for young engineers and scientists. Major co-funded research programmes in basic, clinical, and public health support hundreds of projects. They boost opportunities for women and early-career researchers, and boost India's high-skilled workforce.

India’s bilateral trade with the UK stood at US$23.14 billion in 2024-25. It increased by 8.42 per cent from US$21.34 billion in 2023-24.

India’s export to the UK stood at US$14.56 billion in 2024-25. It increased by 12.6 per cent (from US$12.92 billion) in 2023-24. India’s imports from the UK stood at US$8.58 billion in 2024-25, witnessing a surge by 2.01 per cent (from US$8.41 billion) in 2023-24. 

While the British companies seek to expand their presence in India to improve their balance sheets, the Indian government needs to seek a fair share in the movement of Indians to the UK, besides a fair share in the service sector. The FTA enables growth in IT and ITeS, financial and professional services, education, and other business services.

This also expands high-skilled jobs across India. The Double Contributions Convention provides a three-year exemption from the UK social security for eligible Indian workers on temporary assignment and their employers. This benefits more than seventy-five thousand workers.

Mobility Factor

India has secured favourable mobility provisions for skilled Indian professionals, including contractual service suppliers, business visitors, investors, intra-corporate transferees, and independent professionals like yoga instructors, musicians, and chefs. Importantly, dependents of transferees with work authorisation will also benefit.

The agreement establishes mechanisms to address non-tariff barriers so that goods and services move more predictably and quickly. India-UK shared work on investment frameworks and safety and quality standards could reduce project risks, so that more clean energy projects reach ordinary consumers faster.

Untapped Sub-Sectors 

It is estimated that there are certain sub-sectors with untapped potential for export to the UK from India. This includes jewellery and precious metal (US$902 million), machinery and electricity (US$800 million), motor vehicles and parts (US$775 million), apparel (US$618 million), and chemicals (US$482 million).

Services export has increased from US$10.76 billion in 2019 to US$19.8 billion in 2023, with a Compound Annual Growth Rate (CAGR) of 16.48 per cent. Services import has also increased from US$7.24 billion in 2019 to US$13.12 billion. In 2023, with a CAGR of 16.01 per cent.

Benefits Of FTA

FTA ensures duty-free access to the UK market for approximately 99 per cent of Indian exports by value. This will provide a significant boost to our exporters across various sectors.

Key sectors such as textiles, marine products, leather, footwear, sports goods, toys, gems, and jewellery, which are crucial for employment generation, will gain enhanced competitiveness in the UK market. Sectors such as engineering goods, auto parts and engines, and organic chemicals will also benefit from greater market access in the UK.

The UK will gain enhanced access to India, one of the world's largest and fastest-growing economies, with a burgeoning middle-class consumer base. India will reduce tariffs on various products of the UK’s key interests, including whisky and gin, automobiles, cosmetics, aerospace components, lamb, and medical devices, among others. 

From an Indian perspective, the focus over the next decade should be on achieving technology transfer from the UK in various high-tech sectors and, thereby, add value to the FTA.

India can, and should, push for development and creation of jointly manufactured products in various sectors in which Indian MSMEs benefit. As a next step, the idea should be to develop India as a supply chain hub for UK companies, which, in the long run, will reduce the UK’s dependence on China.     

(The writer is a commentator on geopolitics. Views are personal.)