In the backdrop of stalled WTO-led multilateral trade negotiations, countries have increasingly turned to bilateral trade agreements to secure preferential market access and de-risk critical sectors. In line with this global shift, India has accelerated its own trade diplomacy, recently signing FTAs with Australia, the UAE, and the EFTA bloc, to lower trade barriers, diversify critical sectors, and assert regulatory credibility.
Continuing this momentum, India and the United Kingdom have concluded a comprehensive Free Trade Agreement (‘FTA') after more than three years of rigorous negotiations spanning 14 rounds. Accompanying the FTA is a long-anticipated Social Security Agreement (‘SSA'), which addresses key concerns of cross-border professionals.
While the final legal text is yet to be released, official press statements indicate that this FTA, once ratified and implemented, will deliver significant trade liberalisation and is poised to be one of India's most strategically important trade deals to date, both economically and geopolitically.
Tariff Liberalisation and Market Access
India has agreed to reduce import duties on several high-value British exports, including premium alcoholic beverages (such as Scotch whisky and gin), luxury automobiles, medical devices, cosmetics, and confectionery items—many of which are expected to benefit from duty reductions of up to 90% over a phased implementation schedule.
Conversely, the UK has committed to eliminating import duties on nearly 99% of Indian exports, including core labour-intensive sectors such as textiles, leather goods, marine products, toys, sports equipment, and engineering goods. This is expected to offer a significant boost to India's merchandise exports, particularly for micro, small, and medium enterprises (‘MSMEs') operating in these segments.
While this expansive market access offers substantial gains for Indian textiles and engineering exporters, it may also create adjustment pressures for certain domestic segments, notably mid-range Indian automobile manufacturers and premium liquor brands, which will now face intensified competition from established UK-based players. Thus, Indian automobile manufacturers and premium liquor brands must revisit pricing models and actively explore export offset strategies to mitigate domestic market disruption.
Social Security Relief for Indian Professionals
The accompanying SSA addresses the longstanding issue of dual social security contributions for Indian professionals working in the UK. Once implemented, Indian employees on short-term assignments will be exempt from UK National Insurance contributions if covered by India's Employees' Provident Fund Organisation (‘EPFO'), resulting in cost savings and operational ease for Indian firms in IT, consulting, pharma, and engineering sectors.
Regulatory Cooperation
The FTA contains forward-leaning commitments in the domain of regulatory cooperation, particularly for pharmaceuticals, chemicals, and agri-based goods. Indian pharmaceutical manufacturers who are already compliant with the UK's Medicines and Healthcare products Regulatory Agency (‘MHRA') standards are expected to gain from expedited product approvals and enhanced market access.
Additionally, Indian agritech and processed food exporters may need to align swiftly with UK certification regimes such as the British Retail Consortium (‘BRC'), Hazard Analysis Critical Control Point (‘HACCP'), and Soil Association Organic standards. These alignments, while posing a short-term compliance challenge, could unlock sustained access to high-value consumer markets over time.
Government Procurement
India's government procurement (GP) market is one of the largest in the world—estimated at nearly $600 billion annually, or approximately 15% of GDP. It is a critical industrial policy instrument, used to promote local manufacturing, build MSME capacity, and advance national programs like ‘Make in India' and ‘Atmanirbhar Bharat'. Under the India-UK FTA, UK suppliers gain access to India's central government procurement tenders above ₹200 crore as Class 2 suppliers, provided that at least 20% of their product or service originates from the UK.1
However, UK suppliers are excluded from state and local government-level contracts and sensitive sectors. This marks only the second time India has offered such access to its central government procurement market in a trade agreement, following the Comprehensive Economic Partnership Agreement (CEPA) with the UAE.
India has consistently advocated for a balanced and inclusive framework on government procurement (GP) at the WTO, emphasizing the need to preserve policy space for domestic socio-economic development. While India is an observer to the plurilateral Agreement on Government Procurement (GPA), it has refrained from joining as a party, citing concerns over asymmetrical commitments that could disadvantage its MSMEs and limit the government's ability to promote local industry, employment, and strategic interests through public procurement.
This is the second trade agreement where India has offered the central government procurement market to a foreign partner. The first such concession was given in the Comprehensive Economic Partnership Agreement (CEPA) with the UAE.
Business Mobility
Business travel between the UK and India is essential to the delivery of goods, services, and investment, and a strong contributor to economic growth. The FTA locks in business mobility rules for the foreseeable future, covering short-term, temporary, and limited business travel. This gives UK businesses certainty that existing access to the Indian market will continue indefinitely, ensuring that UK professionals can travel to India (and Indian professionals to the UK) to attend conferences, transfer to branches, or supply services as part of contracts. Both governments have committed to transparent visa application processes and avoiding unnecessary obstacles, benefiting sectors such as engineering, architectural services, accountancy, and management consultancy.
Professional Services Annex
UK and India have agreed to a professional services annex covering diverse, highly skilled sectors such as accountants, auditors, architects, solicitors, barristers, and engineers. This annex encourages UK and Indian relevant bodies to negotiate mutual recognition agreements for professional qualifications, streamlining processes for professionals to have their qualifications recognized in the other country. By reducing administration, time, and costs, this supports economic growth and liberalizes bilateral trade in professional services.
A Professional Services Working Group will be established to review and monitor the annex's implementation, liaise with relevant bodies, and exchange information on professional services issues.
Strategic and Geopolitical Implications
Beyond trade, the FTA reflects India's broader ‘China-Plus-One' strategy and its ambition to diversify economic ties. It enhances India's Indo-Pacific presence and sets a benchmark as talks continue with the EU, Canada, and others. For the UK, the deal is a post-Brexit pivot to remain a relevant trade partner in the Indo-Pacific, outside the EU framework.
Although the agreement includes chapters on sustainability and digital trade, these are lighter in comparison to EU norms. Future negotiations—particularly with the EU—may demand stricter commitments on carbon intensity, digital tax regimes, and ESG standards like the Carbon Border Adjustment Mechanism (‘CBAM').
The Road Ahead
The India–UK FTA is more than just a trade deal—it's a reflection of India's evolving, confident approach to global economic partnerships. At a time when WTO processes remain stuck, this agreement helps India secure better market access and broaden its economic base. Tariff cuts will give Indian exports in textiles and engineering a strong boost, though some domestic sectors like automobiles and premium liquor will need to step up their game to stay competitive. For Indian professionals in IT and consulting, the Social Security Agreement promises real relief, making overseas assignments less costly and bureaucratic. On the regulatory front, the FTA opens doors for pharma and agri-exports, but quick alignment with UK standards will be crucial. Altogether, the deal showcases India's pragmatic and forward-looking trade policy in an increasingly fragmented world.
Footnote
1. The Public Procurement (Preference to Make in India) Order 2017 categorizes suppliers into three classes: Class 1 (over 50% local content, with preference), Class 2 (20% to 50% local content), and Class 3 (less than 20% local content).
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