May 2025
After more than two years of extensive negotiations, the India–UK Free Trade Agreement (FTA) is nearing finalization. This landmark pact is set to redefine bilateral economic engagement and pave the way for substantial benefits across vital sectors such as information technology, pharmaceuticals, engineering goods, and the alco-bev industry.
Forging a Modern Trade Alliance
The FTA is envisioned as a forward-looking, multifaceted deal designed to improve market entry, eliminate trade obstacles, and facilitate the smooth exchange of goods, services, and talent. It supports India’s broader goal of forging impactful trade partnerships and aligns with the UK’s efforts to reposition itself globally after its departure from the European Union.
Sectoral Highlights
1. Information Technology: Enhancing Talent Mobility and Market Reach
India’s booming IT industry, valued at over $250 billion, stands to gain immensely from the agreement. The commerce ministry estimates that improved visa provisions and relaxed work regulations could benefit more than 60,000 skilled professionals annually. This increased mobility is expected to streamline service delivery for Indian IT firms operating in the UK.
Top technology companies such as TCS, Infosys, Wipro, HCL Tech, and Tech Mahindra are likely to see improved business opportunities, especially in sectors like banking, insurance, and finance where the UK remains a global leader.
2. Pharmaceuticals: Streamlined Access for Generics
The pharmaceutical segment is set to benefit through simplified regulatory pathways, enabling quicker approvals for Indian generic drugs in the UK market. This move is particularly beneficial to Indian drug makers, known for their cost-effective, high-quality products.
Major players including Sun Pharma, Cipla, Dr. Reddy’s Laboratories, and Lupin are well positioned to increase exports while reducing time-to-market and compliance costs.
3. Industrial and Engineering Products: Boosting Manufacturing Exports
The UK’s growing demand for infrastructure development and advanced manufacturing opens up new opportunities for Indian exporters of industrial goods. The FTA aims to reduce duties and clarify sourcing regulations, making Indian machinery and components more competitive.
Firms like Cummins India, Thermax, L&T, and ABB India are expected to benefit from increased collaboration with UK companies in power systems, industrial solutions, and construction equipment.
4. Alcohol and Beverages: Tariff Cuts for Greater Market Penetration
In a significant move, India has agreed to reduce the steep 150% import duty on Scotch whisky and British gin to 75%. This tariff cut is expected to make premium UK spirits more affordable and accessible to Indian consumers. In return, India gains increased exposure for its own alcoholic beverage exports.
Praveen Someshwar, CEO of Diageo India, welcomed the agreement, calling it a “historic milestone” that will expand consumer choice in what is considered the world’s largest whisky market. Companies like United Spirits, Radico Khaitan, and Allied Blenders & Distillers are poised to benefit from this change.
Mutual Economic Gains
The FTA promises to be a mutually advantageous arrangement, boosting trade volumes, creating jobs, and fostering innovation. It reinforces India’s objective to evolve into a global manufacturing and services powerhouse and helps the UK cement its presence in the Indo-Pacific region.
With the potential to energize supply chains, attract investment, and promote inclusive growth, this agreement could set a new benchmark for bilateral cooperation in the post-pandemic world economy.
What’s Next?
While some aspects—particularly related to agriculture and labor—are still under review, the political commitment from both sides is evident. Prime Minister Narendra Modi and his UK counterpart, Keir Starmer, have both expressed strong support for concluding the deal swiftly.
Upon formal ratification, the India–UK FTA could emerge as a flagship example of how developed and emerging economies can collaborate on equal footing for long-term, strategic prosperity.