India-UK FTA: Five Key Sectors Set For Export Boom

As India and the UK gear up to sign their landmark free trade agreement (FTA), Indian exporters across key sectors are eyeing major wins. The deal slashes tariffs on a range of goods, offering near-zero-duty access to the UK market, giving India a competitive edge.

The modern and comprehensive pact covers 26 chapters, including trade in goods, services, and intellectual property rights, aiming to deepen economic integration between the two nations.

Under the agreement, nearly 99% of Indian goods exported to the UK will now enjoy zero-duty access, covering almost the entire value of trade. This is expected to give a significant boost to India's exports, particularly in labour-intensive sectors like textiles, gems and jewellery, toys, and auto components, which previously faced tariffs ranging from 4% to 16%.

In textiles, tariffs that were as high as 12% have been brought down to zero. This levels the playing field for Indian exporters, especially against rivals like Bangladesh and Pakistan, who earlier enjoyed tariff-free access to the UK.

Footwear makers will see tariffs drop from 16% to zero, with exports expected to exceed $900 million. Industry estimates show India could capture an additional 5% market share in the UK within two years.

In agriculture, duty-free access has been granted for 95% of tariff lines. Staples like turmeric, cardamom, mango pulp, and marine products, including shrimp and tuna, will benefit, with agri exports expected to rise over 20% in three years. However, dairy, apples, and oats remain excluded.

Engineering goods face tariff eliminations up to 18%. Exports could double to $7.5 billion by FY30. Electronics exports such as smartphones, inverters, and fibre cables are also poised for a lift.

Software services, already worth $32 billion in 2024–25, could see 15–20% annual growth, backed by strong UK commitments.

The pharma sector, though small in tariff lines (0.6%), holds high value. India's exports to the UK are under $1 billion, despite UK pharma imports worth $30 billion, leaving room to grow, especially in generics and med-tech, where tariffs have been removed.

Chemicals, currently a $570 million export segment to the UK, are set for a 30–40% jump with zero-duty access on 1,206 lines. Plastics, sports goods and toys, and gems & jewellery are also primed for major gains.

India's gems and jewellery sector is poised for a major boost under the India-UK Free Trade Agreement, with tariff relaxations expected to double exports to the UK in the next 2–3 years. The UK currently imports around $3 billion worth of jewellery annually, while India's total exports to the UK stand at $941 million, of which $400 million is from jewellery alone.

The FTA opens up significant market potential for Indian exporters, who will now benefit from duty-free access and reduced landed costs. This will enhance price competitiveness against rivals like China and Vietnam, who don't enjoy similar preferential terms with the UK.

Apart from goods, the FTA also opens new opportunities in the services sector. The UK has committed to greater access in IT, financial, educational, and professional services. Indian professionals, including chefs, yoga instructors, and musicians, will also gain temporary work access in the UK.

One of the biggest wins is a three-year exemption on UK social security payments for Indian workers and their employers, projected to save nearly Rs 4,000 crore annually. The deal also addresses non-tariff barriers to ensure smoother export flows and reduce trade friction.

What UK Gains

For the UK, India's average tariff on UK products will drop from 15% to 3%, which means British companies selling products to India, from soft drinks and cosmetics to cars and medical devices, will find it easier to sell to the Indian market.

Whisky producers will benefit from tariffs slashed in half, reduced immediately from 150% to 75%, and then dropped even further to 40% over the next ten years—giving the UK an advantage over international competitors in reaching the Indian market.

The UK's large and varied manufacturing sectors will benefit from tariff cuts on aerospace (as high as 11% reduced to 0%), automotives (up to 110% down to 10% under a quota), and electrical machinery (from up to 22% down to either 0% or a 50% reduction).

A reduction in tariffs, combined with a reduction in regulatory barriers to trade between the UK and India, is estimated to:

• Increase UK exports to India by nearly 60% in the long run—this is equivalent to an additional 15.7 billion pounds of UK exports to India when applied to projections of future trade in 2040.

• Increase bilateral trade by nearly 39% in the long run, equivalent to 25.5 billion pounds a year, when compared to 2040 projected levels of trade in the absence of an agreement.