On 6 May 2025, the UK and India concluded talks on a trade deal Free Trade Agreement (FTA). The FTA is said to have been a product of three years of discussion between the respective governments. According to the Department of Trade and Business, "the UK has secured the best deal that any country has ever agreed with India". Prime Minister Keir Starmer has said the deal would boost the economy and "deliver for British people and business".
So, what are the key benefits arising from the FTA? We have outlined a few key points (please note the list is not exhaustive).
Easier access to goods through lower tariffs
The FTA will reduce Indian tariffs on circa 90 percent of product lines, with 85 percent of those becoming fully tariff-free within a decade, according to details published by the UK's Department for Business and Trade.
Lowering tariffs will encourage trade and provide consumers with a greater choice of goods at lower costs.
Examples of industries benefitting from lower tariffs include:
- Whisky and gin tariffs, currently set at 150 percent, will be halved to 75 percent before falling to 40 percent after 10 years.
- Automotive tariffs will be reduced to 100% to 10% under a quota.
- Reduced tariffs on medical devices that take the UK’s complex supply chains into consideration is hoped to create novel opportunities for the UK life sciences sector.
- The UK cosmetics and toiletries exporters will benefit from the lower tariffs. tariffs on soaps, shaving cream, face cream and nail polish will either be removed on day one or removed after staging over 10 years. In addition, perfumes and eau de cologne will see tariffs of 20% halved after staging, increasing the opportunity for exporters and reducing costs.
- Other sectors which will see lower tariffs include soft drinks, confectionary (chocolate and biscuits), manufacturing, aerospace and electrical circuits and conductors, and high-end optical products.
Streamlined digital trade
According to the Department of Trade and Business, the FTA will reduce unjustifiable barriers to digital trade and promote compatibility of digital trading systems, including through supporting the legal recognition of electronic contracts and electronic authentication.
Some of the benefits are said to include:
- Introducing provisions that will support the use of electronic contracts and transactions, which will cut red tape for business while driving innovation and support emerging technologies through UK-India collaboration.
- Businesses will be protected from forced transfer of their source code, allowing UK businesses to expand to India with greater confidence.
- Protecting consumers against spam on their phones. Unsolicited commercial messages will be minimised, for example by requiring consent or working towards making spam clearly identifiable, such as by including who they are sent on behalf of. Introducing provisions on cross border data flows and data localisation, which will present the UK with the opportunity to negotiate these rules with India when they agree similar commitments with other FTA partners. Any transfer of personal data will still remain protected under the UK’s data protection law.
Movement of people
The FTA will include provisions allowing UK professionals to travel to India (Indian professionals can vice-versa travel to the UK) to attend conferences, transfer to an Indian branch of their organisation, and supply a service as part of a contract. This is said to benefit professionals and businesses across a wide range of sectors including engineering and architectural services, accountancy services, and management consultancy.
According to the Department of Trade and Business, the UK and India will ensure that visa application processes remain transparent, and that governments do not create unnecessary obstacles for professionals to travel between the UK and India.
Financial services
On foreign direct investment, UK ownership or investment into Indian insurance or banking firms will be locked in at up to 74% UK owned or invested.
The deal is said to commit the UK and India to cooperate on issues such as FinTech and diversity in finance, alongside promoting financial stability, and improving market integration.
The deal is said to include non-discrimination rules that will ensure that UK firms are treated fairly when providing services in India’s market. It will include comprehensive transparency commitments which will ensure that India’s rules and practices for the authorisation of UK financial services firms are fair and transparent, and that regulatory measures are administered in a reasonable, objective and impartial manner.
DCC
Alongside the FTA, the UK and India have agreed to negotiate a reciprocal Double Contributions Convention (DCC). Under the DCC, Indian workers working in the UK - and their employers – will be exempted from paying national insurance for three years, albeit they will pay social security taxes in India.
The DCC is said to operate on similar principles to the UK’s other Social Security Agreements (SSA) with the EU and countries such as Switzerland, Norway, Canada, Japan, Chile and South Korea. The DCC will not affect individuals’ rights to access benefits from the country in which they pay social security contributions or the requirement to pay the UK immigration health surcharge.
Comments
One key element missing from the FTA is the UK and India's approach to encouraging cooperation in the legal services' industry. The Law Society president, Richard Atkinson, has commented on the "missed opportunity for a significant breakthrough in terms of market access for lawyers in both India and the UK." The UK is the world’s second largest legal services provider. Legal services contribute £57.8 billion annually to the economy. The sector supports around 526,000 people in employment, amounting to 1.6% of the UK workforce. Mr Atkinson has commented: 'Greater connectivity with the UK legal services market would allow Indian companies to realise their international ambitions within India at a competitive cost. The presence of UK law firms and UK lawyers would not only facilitate international trade but also provide opportunities for young legal professionals to develop globally competitive skills, without needing to leave India for another international hub.'
The lack of reference to the legal market may come as a surprise, given the Indian government's recent proposed amendments to the Advocates Act, pursuant to which the Bar Council India will have authority to register and regulate law firms (a step that was said to facilitate the growth and expansion of international law firms in India).
For now, it is not known why the FTA omits significant reforms to the legal. It will be interesting to see whether the UK and Indian governments introduce any further changes which may relate to the legal sector.
