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Last updated: 08 May, 2025  

india-uk.jpg India-UK FTA - Let’s benefit from it!

india-uk.jpg
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Bikky Khosla | 08 May, 2025
At a time when nations across the globe – just after Donald Trump took over the Presidency of the US – are caught in tariff wars, India too is facing mounting threats of import tariffs from the United States. And the free trade agreement we signed with the UK recently offers a much-needed breather, especially for our MSME sector.

If you ask my honest opinion, I would say, the FTA will provide significant market access to our MSMEs and give them a much-needed boost, especially to the labour-intensive sectors such as apparel, auto components, jewellery, and leather goods.

With the new FTA signed between the two nations, bilateral trade is expected to increase by an additional $32 billion annually by 2040, up from the current level of $52 billion. India is a major market for the UK and was its 11th largest trading partner last year. Under the signed agreement, exporters from the UK specially from sectors such as cosmetics, aerospace, machinery, soft drinks, and cars will benefit as they will face lower tariffs on exporting to India. On the other hand, 99 percent of all Indian exports to the UK will be duty free and with the UK opening its market, Indian exporters will have a level playing field and it will be a big win for them, especially for the MSMEs.

When I look at the official figures of India-UK trade, Indian exports to the UK accounts for approximately 4.15% of its total trade and stands at over $34 billion. Also in the current global trade environment, time was apt to forge new trade alliances and reduce over dependence on major economic powers like China and the US. I must applaud our government whose relentless efforts took shape in the form of this India-UK FTA. We had to look beyond our traditional trade partners and build new trade relationships for future economic growth and stability.

That said, I believe the interests of our domestic suppliers must also be safeguarded. Any excessive dumping of products from the UK could lead to market distortions, particularly affecting vulnerable sectors like agriculture and causing unrest among farmers. I sincerely hope our government has taken that into consideration too.

In the end, I believe this free trade agreement marks more than just a diplomatic milestone. It is without doubt a strategic move that aligns with India’s long-term trade interests and I hope it serves as a blueprint for future trade agreements to come.
 
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