UK-India Trade: Opportunities for your business under the new Free Trade Agreement

Introduction 

On 6 May 2025, the UK and India announced a Free Trade Agreement (FTA) that seeks to reshape economic ties between the two nations by: (i) introducing tariff reductions on both sides; (ii) expanding market access; and (iii) potentially boosting bilateral trade by up to £25.5 billion annually by 2040.  

While the agreed FTA undergoes final legal review pre-ratification, UK businesses are already anticipating new opportunities in India, particularly in public procurement and the tech, telecoms, healthcare, and energy sectors.                                      

Potential Economic Gains

While we have yet to see the draft agreement, the UK government’s press releases estimate that the deal could add up to £4.8 billion to UK GDP and increase bilateral trade by 38% by 2040 – mainly by virtue of India reducing or removing protectionist tariffs on 90% of UK goods imported into India.

While the increase in GDP may not be materially significant at a national level, in practice, the benefits to UK exporters – from beverages, automobiles, advanced manufacturing to professional services - may be able to exploit market opportunities in India, which has traditionally maintained high tariff, protectionist approach to trade. In particular: 

• UK-based healthcare and pharmaceutical products stand to benefit from immediate or phased tariff cuts; 
• UK-based advanced manufacturing firms (e.g. defence and automotive) will be able to take advantage of a 90% drop in tariffs under a quota-based system; 
• UK-based infrastructure and renewables developers will gain market access to a society that is transitioning to clean energy; and 
• UK-based spirits manufactures may profit from a sharp drop in whisky tariffs and export to ones of the world’s largest whisky consumers.

Meanwhile, Indian exporters will benefit from tariff-free entry into the UK for 99% of Indian goods, which, as well as benefitting Indian textiles, apparels and shrimp, could engender growth in Indian exports of telecoms and IT services, with Indian companies already supplying close to 10% of the UK’s imports in those sectors. 

For further information on the anticipated impact of the FTA, please see the UK government’s Technical Note.

Indian Procurement Opportunities 

For the first time ever, India (which spends 20% of its GDP on public procurement) is granting access to its public procurement market, worth at least £38bn annually. This means that UK business will be able to bid for approximately 40,000 Indian tenders for goods, services and construction projects. Further deepening the relationship, the UK and India have agreed that businesses manufacturing in India will receive preferential treatment under the “Made in India” label if at least 20% of the product or service originates in the UK. In the long term, this has the potential to increase economic and technical collaboration between UK and Indian firms and strengthen the manufacturing and service industries in both nations.

Specifically, UK firms’ access to clean energy, infrastructure development and advanced manufacturing procurements will allow them to grow and develop new markets, while simultaneously bringing world-leading expertise and credentials to the Indian market. 

Seizing the Moment

While the details of the FTA are yet to be finalised and made public, UK businesses are already thinking of how to leverage the opportunities created by the FTA and are developing strategies to enter, or grow, their presence in the Indian market. 

At Bird & Bird, we can support by mapping out potential benefits to investing and growing your business’ presence in India, delivering training on the right way to approach bidding in the Indian market, and helping forge and secure the right local partnerships that will allow you to build resilient supply chains and maximise the benefit from opportunities afforded by the FTA.