The FTA eliminates tariffs on nearly 99 per cent of goods traded between the two nations, from textiles and footwear to seafood and auto components. This opens the UK market to Indian MSMEs previously constrained by high entry barriers and promises more opportunities for skilled Indian professionals, from IT engineers to architects and healthcare workers.
SHORT-TERM COSTS, LONG-TERM POTENTIAL
The deal is expected to encourage MSMEs to explore new niches in design, manufacturing, and value-added services. With simplified customs and streamlined rules, smaller Indian businesses will find it easier to tap into UK demand. To fully capitalise on the agreement, Indian MSMEs will need to adapt to the UK’s stringent environmental, labour and gender equality standards. While these changes may pose challenges, they also push Indian industry toward higher quality and sustainability benchmarks.
The FTA provides annual work opportunities for over 60,000 skilled Indian professionals, alongside relaxed mobility rules for cross-border expertise. A significant win is the removal of the double social security contribution requirement, easing the financial burden on Indian workers in the UK.
Short term benefits in exports may not translate to long term gains. India may lose Rs 4060 crore in customs revenue in the first year, with losses increasing in subsequent years. Provisions on Intellectual Property could make it harder for India to issue compulsory licences for generic drugs, potentially raising medicine costs. Government procurement concessions for UK firms may also set precedents affecting future trade deals and this would be a disadvantage to Indian manufacturers.
BOOST FOR TAMIL NADU
Tamil Nadu stands to gain substantially. Removal of 8 – 12 per cent UK import duties on garments and knitwear will keep Tiruppur and Coimbatore competitive with textile leaders like Bangladesh and Vietnam. The state’s textile exports, valued at USD 8 billion last year, could grow by over 50 per cent in the next five years.
Ambur and Vellore, renowned for leather goods, will benefit from the 8 per cent tariff cut. The automobile parts sector could see a major boost, with tariffs dropping to 10 per cent. This will give a stiff competition to Chinese counterparts by building solid supply chains in EV and automobile components. More seamless integration of global value chains by UK Automobile companies like Jaguar Land Rover will propel automobile part production.
The FTA marks a strategic agreement between largest economies. It shows India’s strength in the geopolitical scenario and maybe the future of trade in the volatile Trump era. There is much left to unearth – role of labour clauses, impact on sustainability and climate, regulations and IP. This is just the beginning and India’s optimistic opportunity to make a mark in global trade.
