After nearly three years of negotiations, India and the United Kingdom finalised a landmark Free Trade Agreement (FTA) on May 6, 2025, marking a pivotal shift in global trade dynamics. An SBI report highlights that the agreement slashes tariffs across 90% of goods, aiming to enhance bilateral trade by £25.5 billion, contribute £4.8 billion to the UK’s GDP, and boost UK annual wages by £2.2 billion. The deal positions both nations to reduce dependence on Chinese supply chains and navigate challenges from US tariffs, reflecting a strategic realignment in the post-Brexit and post-globalisation era.
The FTA significantly reduces India’s tariffs on whisky and gin from 150% to 75%, with a further drop to 40% within a decade. In comparison, automotive tariffs will decrease from over 100% to 10% under specific quotas. Other British goods, including cosmetics, aerospace products, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate, and biscuits, will also benefit from lower tariffs. For India, 99% of its exports, such as textiles, footwear, and food products, will enter the UK duty-free, fostering growth in labour-intensive sectors.
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India is advancing trade negotiations with the EU, Australia, Peru, Sri Lanka, and Oman, while reviewing existing agreements with South Korea and ASEAN, signalling a broader reconstitution of its global trade architecture. The SBI report describes the FTA as a “dialectical moment” in 21st-century trade philosophy, blending national interest with strategic liberalism, and setting a benchmark for India’s ongoing trade discussions amidst a turbulent global economic landscape.
One of the FTA’s main objectives is to counter China’s economic and strategic dominance in the region.
