The UK has signed a long-anticipated free trade agreement with India, marking the most significant trade pact since Brexit.
Announced in May 2025, the deal eliminates or significantly reduces tariffs on most goods traded between the two nations. It also opens new doors in procurement and investment, removing longstanding barriers that have made India a complex trade partner.
This article will outline the key headlines from the trade deal, take an in-depth look at the sectors set to benefit most, outline specific opportunities for UK businesses and explain vital logistical considerations.
Key details of the UK-India trade deal
India will reduce or eliminate tariffs on 90% of UK product lines over the next ten years. 64% will be tariff-free immediately, rising to 85% after 10 years. Meanwhile, the UK will scrap tariffs on 99% of goods imported from India. The deal significantly enhances the export prospects for businesses in both nations.
The tariff relief will benefit most sectors, but particularly food and drink, automotive, manufacturing, pharmaceuticals, and aerospace.
It’s expected to increase UK-India trade by £25.5bn per year, with UK exports to rise 59% by 2040. To put that in context, in 2024 trade between the nations was £42.6bn, with UK goods exports at £17.1bn. So, the deal promises a sizeable increase in trading volumes.
Forecasts suggest the deal could add £4.8 billion a year to UK GDP and increase wages by over £2.2 billion annually. Furthermore, the deal is India’s first to include chapters on labour rights, gender equity, and anti-corruption measures.
This is the first free trade agreement signed by the UK under the Labour government. It’s expected to be the first of many focusing on high-growth economies in Asia and beyond.
“Whilst this is not a free trade deal, it’s certainly a significant development. India is famous for protectionist policies, which this deal goes some way to removing. So, it does give UK businesses a significant advantage when exporting to a nation which is forecast to see spectacular growth in the years ahead.”
Jamie Craig, WTA Customs Consultant
Key sectors set to benefit from the UK-India trade deal
Food and drink
Food and drink is the UK’s biggest manufacturing sector and its exports to India are one of the success stories of recent years. The new deal is certain to only amplify that.
Exports grew 14.6% in 2024 to £293.8m in 2024, according to the FDF’s Trading Snapshot. Some of the segments within food and drink which have been outlined as the biggest beneficiaries include:
- Whisky and gin, where tariffs drop from 150% to 75% immediately, falling to 40% within 10 years. India is already in the top 5 of Scotch whisky importers and tariff reductions should increase that significantly.
- India opens market access to UK lamb, pork, and other meats previously restricted.
- Soft drinks, chocolates, biscuits, crispbreads and crackers which will all have tariffs completely removed.
- Premium UK brands targeting India’s expanding middle class will see improved price competitiveness and margin. India’s middle class is estimated to be 432 million people already, concentrated around the major cities.
Automotive and manufacturing
Automotive and manufacturing exports make up a significant of the UK’s goods exporting portfolio also. Their inclusion as a significant part of the trade deal has been met warmly by the sector.
“While the agreement will likely feature compromises and might not offer unfettered market access to all UK automotive goods, we appreciate the considerable effort British negotiators have devoted to secure the first partial liberalisation of the Indian automotive market.”
Mike Hawes, Society of Motor Manufacturers and Traders (SMMT) Chief Executive in a statement.
Some of the key details for the automotive and manufacturing sector:
- Duties on UK-made cars entering India drop from over 100% to 10%.
- Aerospace parts, electrical machinery, and medical devices will face lower duty charges.
- UK manufacturers reliant on Indian parts (such as components and sub-assemblies), will save through reduced import tariffs.
- Technical standards cooperation included in the deal simplifies regulatory compliance.
Why closer UK-India trade benefits UK businesses
Access to a high-growth market
India is forecast to become the world’s third-largest economy by 2028, with annual GDP growth expected to exceed 6% for the foreseeable future. Its middle class is expanding rapidly and as mentioned is estimated to be 432 million already. Consequently, demand for high-quality consumer goods and infrastructure will rise over the coming years. An area where UK exporters are strong.
UK businesses are getting preferential access to the economy which many expect to see stratospheric growth in the coming 25 years.
Reduced trade barriers and costs
India’s historically high tariffs and complex customs procedures often discouraged UK exporters. The average tariff rate is 12%, way above similar large economies.
The FTA tackles these challenges directly, reducing or removing duties, simplifying documentation, and committing to more modern customs practices. For British firms, that means lower transit times, simpler rules for compliance, and more competitive pricing for Indian buyers.
Diversification and supply chain resilience
The deal supports the UK’s aim of reducing over-reliance on traditional markets like the EU and China. Closer India ties provide new routes for sourcing, production, and distribution.
This also protects against supply chain disruption or a damp economic outlook impacting one particular trading bloc or economy.
Leveraging cultural ties
A close trading relationship between the UK and India is a logical step.
The UK is home to over 2 million British Indians and India is the biggest country within the Commonwealth. There is a much deeper understanding of Indian culture in the UK compared to other nations. A shared language, business customs, and family networks all help businesses win in trade.
Combining this with the formal trade deal, these links can accelerate market entry and deepen long-term partnerships.
The logistics of trade with India
Sea freight remains the primary mode for UK-India trade. Key UK departure ports of course include Felixstowe, Southampton, and London Gateway.
In normal circumstances, goods travel via the Suez Canal to major Indian ports like Jawaharlal Nehru Port (Mumbai) and Mundra (Gujarat), on the east coast. Jawaharlal Nehru is the biggest of these, and the most strategically placed for UK exporters, handling 7.05m teu in 2024.
When transiting the Red Sea, average transit times range from 20 to 30 days, depending on the route and carrier. Allow for 35-45 days in times of a diversion requiring vessels to transit around the Cape of Good Hope.
Air freight is vital for many high-value or perishable items. Heathrow is the best option for UK exporters, boasting many direct flights to India every day, particularly to Delhi and Mumbai. Depending on time taken to clear customs, door-to-door transit can take as little as two days.
Trade volumes on both sea and air routes are expected to grow rapidly in the next 5 years. You can expect an increase in the number of sea freight services between the countries.
“Businesses looking to export from the UK to India have the added benefit of it being a backhaul route. That means rates are typically lower, sometimes much lower, than freight moving the other direction.”
Liam Launders, Head of Sales, WTA
Whilst not quite a free trade deal, the UK-India trade deal is the biggest signed since Brexit. India is a fantastic opportunity for businesses. With growth expected to be huge over the coming decades, building a presence in the country could deliver exceptional profitability for many UK firms.
The challenge is execution. Businesses that move early to align supply chains, develop partnerships, and explore the Indian market will be best placed to benefit from the opportunities ahead. To explore market entry strategies and logistical advice for finding success one of the world's most exciting economies, get in touch with our experts.
