India-UK FTA: A New Path in Global Trade

The India-UK Free Trade Agreement (FTA) emerges as a pivotal element of a novel global trade strategy designed to mitigate reliance on China, tackle US tariff challenges, and assist the United Kingdom in economic restructuring post-Brexit, according to an SBI Research report. The agreement offers substantial benefits, including tariff reductions on 90 percent of traded goods, benefiting businesses on both ends.

The report emphasized that the FTA heralds a new global trade direction by bypassing Chinese dependency, navigating US-imposed tariffs, and reshaping post-Brexit Britain's economic landscape. Long-term projections suggest an increase in bilateral trade by £25.5 billion, an uplift in the UK's GDP by £4.8 billion, and an annual £2.2 billion increase in wages. India is anticipated to gain significantly, particularly through bolstered exports and job creation.

India's trade involvement with the UK rose from 1.69 percent in 2022-23 to 1.91 percent in 2024-25, with total bilateral trade hovering around USD 60 billion, expected to double by 2030. Despite a 6.1 percent dip in imports in FY25, India's exports thrived. The FTA encompasses goods, services, and technology, focusing on inclusive growth, robust supply chains, and job creation, with the UK opening sectors like IT, finance, education, and consumer goods.

The agreement unlocks export opportunities for India in labor-heavy industries such as textiles, toys, marine products, and auto components, despite stable immigration rules. Limited professional mobility is facilitated, including about 1,800 to 2,000 annual visas for Indian chefs, musicians, and yoga instructors, underscoring the FTA's role in cementing cultural ties between the nations. The Indian and UK prime ministers are set to officialize the deal, pending parliamentary approvals.

(With inputs from agencies.)