The India-UK Free Trade Agreement (FTA) promises to deepen economic ties between the two nations by slashing tariffs and offering enhanced market entry. With annual bilateral trade projected to rise by $34 billion and 99% of Indian goods receiving zero-duty access to the UK, investors and businesses are watching key sectors expected to benefit from the agreement.
The average tariff on UK imports to India will be reduced from 15% to 3%, opening up Indian markets for high-value British products. For Indian exporters, the FTA provides near-total duty-free access to the UK market, presenting a substantial growth opportunity, particularly in autos, pharmaceuticals, agriculture, electronics, and gems and jewellery.
India will extend tariff relief on luxury internal combustion engine (ICE) vehicles and premium electric vehicles (EVs) priced above £80,000. The import duty on these vehicles will fall from 150% to 75% immediately, and gradually to 40% over 10 years. Affordable EVs, hybrids, and hydrogen-powered vehicles remain excluded from this deal for at least 5 years.
With zero duties, Indian pharma companies can capitalise on the UK's $30 billion annual pharma imports. Although India exports $23.3 billion globally in pharmaceuticals, the UK accounts for less than $1 billion leaving vast room for expansion in this segment.
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Zero-duty access on UK exports of smartphones, inverters, and optical fibre cables will enhance competitiveness for Indian electronics manufacturers, creating export potential and domestic production incentives in the sector.
The FTA eases duties across 985 tariff lines in food and agriculture. Current exports like instant coffee, tea, and spices valued at $309.5 million may see a surge in demand owing to reduced trade barriers and preferential market access.
India currently exports $941 million worth of gems and jewellery to the UK, compared to UK imports of $3 billion. With duty-free access, Indian exporters aim to double their shipping volume to the UK over the next 2 to 3 years.
The India-UK FTA is a landmark development that opens extensive export and import opportunities across key sectors. Reduced tariffs and greater market access should enhance trade flows and provide competitive advantages to Indian companies in autos, pharma, electronics, agriculture, and jewellery markets.
Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
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Published on: Jul 25, 2025, 3:44 PM IST
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