As India navigates through the roiling waters of geopolitics, its free trade agreement (FTA) with the UK has come as a much-needed respite.

The FTA with the UK, signed last month, attains higher significance for India, with the US slapping it with a 25% reciprocal tariff, along with a penalty, for running trade with Russia, which is at war with Ukraine.

At a time when the US-India relations are experiencing significant strain after two decades of closeness, what does the India-UK trade deal bring to the table? How are different sectors and the Indian economy as a whole expected to benefit from it?

Let’s dive deeper into these questions and many more, as we explore the full extent of this move.

The UK has officially said that this agreement with India is its biggest and most economically significant bilateral FTA since Brexit. India, whose bilateral trade with the UK reached $56 Bn in 2024, aims to double this number by 2030.

However, Barclays has reportedly flagged that the move is “unlikely to alter the current account balance for India meaningfully”, as the UK is India’s seventh-largest trading partner, accounting for 3.5% of its total merchandise exports.

While the short-term gains may not be obvious to everyone, experts believe the deal is slated to bring long-term benefits for both nations.

Also, at a time when India is aiming to expand its exports but faces hurdles in the US, which is its top export market, contributing almost 18% to its merchandise exports, the deal with the UK is indeed a major win at a diplomatic level.

“A major supply chain rebalancing is happening throughout the globe, and the FTA will become a catalyst to that,” said Amit Baid, head of tax at law firm BTG Advaya, which advises global corporates on cross-border M&As, tax litigations, compliances, and more.

Baid said that the UK wants to diversify its sourcing options, and India fits into the equation perfectly, as the US tariff hike could dampen Indian exports. This is where the UK deal ensures a win-win for all.

“The FTA may help us fill the export gap by supplying to the US indirectly via the UK,” Baid added.

The expert is of the view that the pact, once in effect, is expected to be a game-changer for India’s export market and........

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