UK-India Trade Agreement Enables £6 Billion in Investment and Employment Opportunities
UK-India Free Trade Agreement Boosts Economy and Trade
The UK and India have signed a historic Free Trade Agreement (FTA) on July 24, 2025, marking a significant milestone in bilateral cooperation. This comprehensive deal is projected to boost the UK economy, attract investment, and enhance market access for British exports.
The UK-India FTA is expected to increase the UK's GDP by up to £4.8 billion annually, representing a 0.13% uplift. The total bilateral trade is forecasted to grow by 39%, adding £25.5 billion annually compared to projections without the deal.
British exporters will benefit from reduced tariffs on various goods. For instance, India's average tariff on UK goods will be slashed from 15% to 3%, improving the competitiveness of British exports in sectors such as cars, cosmetics, soft drinks, and medical devices. Specifically, British whisky tariffs will be cut from 150% to 75%, eventually falling to 40% over a decade, opening a significant export market. Aerospace tariffs will be eliminated entirely, while automotive tariffs will be reduced from up to 110% to 10% under quotas. Electrical machinery tariffs will also be halved or removed.
As a result, the UK's exports to India are projected to rise by 60%, adding £15.7 billion by 2040. This deal offers new opportunities for major UK industries, supporting jobs and economic growth across the nation.
Consumers in the UK are anticipated to save on everyday goods due to tariff reductions and increased competition. Products like cars, cosmetics, and soft drinks are expected to become cheaper as India's tariffs fall sharply. Additionally, tariff cuts on inputs and intermediate goods linked to the UK's industrial strategy could reduce production costs, indirectly supporting wage growth and consumer savings.
Regarding wages, while specific uplift figures for British workers are not explicitly stated, the deal’s contribution to GDP growth and trade expansion is expected to support job creation and economic growth, thereby potentially exerting upward pressure on wages in sectors benefiting from the deal.
The UK-India FTA is considered one of the most significant post-Brexit UK trade deals, helping to diversify the UK’s trade away from the Eurozone and expanding access to one of the world’s fastest-growing major economies. India is projected to become the world’s third-largest economy and a major global importer by 2050.
The agreement also builds on the UK-India Technology Security Initiative signed one year ago, which has unlocked joint activity in telecoms security, critical minerals, AI, quantum, biotech, advanced materials, and semiconductors. The Prime Ministers have encouraged businesses to commit to ethical standards, robust security, safe AI development, and responsible data practices in the context of the deal.
Indian firms are expected to open R&D hubs across the UK, while UK companies are anticipated to gain better access to India's dynamic tech sector. The deal will provide British businesses with better access to quality imports and lower production costs.
The benefits of the deal are expected to reach every region and nation of the UK. The Prime Ministers have signed a renewed Comprehensive and Strategic Partnership, focusing on defense, education, climate, technology, and innovation. This FTA is a significant step forward in bilateral cooperation.
Sources: - India Briefing, “India-UK Trade Deal Explained,” July 31, 2025 [1] - UK Government Impact Assessment of the FTA, July 24, 2025 [2] - Press Information Bureau (India), India-UK CETA signing, July 24, 2025 [3] - Hindustan Times coverage, August 6, 2025 [4]
- The UK-India Free Trade Agreement will result in increased opportunities in the technology sector, as Indian firms are anticipated to establish R&D hubs across the UK, providing British businesses with better access to India's dynamic tech sector.
- The deal will also have significant implications for education-and-self-development, as the renewed Comprehensive and Strategic Partnership between the UK and India focuses on enhancing cooperation in areas such as defense, education, climate, technology, and innovation, potentially leading to knowledge transfer and collaboration in these fields.
