India-UK political relationship
India-UK economic and trade relationship
India's trade agreement history
India-UK FTA
Advantages to India Opportunities of India-UK FTA
Current challenges


In January 2022, the Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles launched negotiations on the free trade agreement (FTA) with the United Kingdom, along with the UK Secretary of State for International Trade. The aim of the FTA is to double bilateral trade between India and the United Kingdom by 2030. The idea behind the FTA was conceived of by the prime ministers of both nations.

India-UK political relationship

India and the United Kingdom have historically had a strong bond. In 2004, the prime ministers of both nations adopted a joint declaration titled "India- UK: towards a new and dynamic partnership". With that, the bilateral relationship between the countries intensified. In 2004, this strategic partnership gave way to annual summits and regular meetings with foreign ministers, and outlined areas for future cooperation in industries such as civil nuclear energy, space, defence, combatting terrorism, and research and development.

The prime ministers of both countries have agreed to hold biennial prime minister-level summits to enhance the partnership and agreed upon a new defence and international security partnership. There is also a well-established system of foreign office consultations between India and the United Kingdom. The last foreign office consultations between India and the United Kingdom were held on 10 May 2019 in New Delhi.

India-UK economic and trade relationship

In 2005, the countries set up a joint economic and trade committee (JETCO) to tackle trade and investment and promote business links. The 15th meeting of the India-UK JETCO, at which the FTA negotiations were launched, was held in January 2022.

India-UK bilateral trade has reached more than $16 billion three times in the past 10 years. India's major exports to the United Kingdom comprise:

  • medicines;
  • jewellery;
  • petroleum oils;
  • footwear;
  • garments; and
  • rice.

India primarily imports:

  • gold;
  • silver;
  • other precious metals;
  • waste and scrap;
  • ores;
  • engineering goods; and
  • chemicals.

The United Kingdom is the sixth largest investor in India, while India is the second largest investor in the United Kingdom. Both have strong investment history, and have taken various steps to further strengthen such investments. In September 2019, the UK-India Launchpad was established to enable globalised start-ups. In 2016, the two countries signed agreements concerning the ease of doing business.

India's trade agreement history

India currently has 11 operational FTAs and six preferential trade agreements.

The following two agreements did not take effect:

  • the India-EU bilateral trade and investment agreement (BTIA) – this agreement came to a standstill following India's stance concerning duty concession on automobiles and the European Union's concern regarding IP rights, among other things; and
  • the regional comprehensive partnership agreement (RCPA) – India's main concern regarding the RCEP was China's expectations in terms of product coverage and concessions.

India-UK FTA

The basic premise of the India-UK FTA is to enhance bilateral trade and thereby strengthen the economic relationship between the two countries. Further, the countries' resource availability and trade activities complement each other. Current trade activity shows that both countries' industries are carrying out successful resource allocation by understanding each other's resource strengths, and there is no visible market distortion by either country due to the exports of the other. The countries have also maintained fair competition with regard to common resources.

Under the India-UK FTA, India and the United Kingdom expect to achieve 65% tariff line coverage through the early harvest scheme (EHS). This means that, on 65% of tariff lines, duties shall be considered for tariff reduction/elimination on an immediate basis after notifying the EHS as per the mutual agreement. Similarly, India and the United Kingdom are considering achieving trade liberalisation on 40% of services through an EHS.

An EHS is typically a good way to understand how realistic the future of a trade agreement looks. It also boosts partner countries' confidence in each other. A tariff liberalisation EHS is introduced long before an agreement is concluded and signed. With regard to the India-UK FTA, the countries aim to achieve the inclusion of 90% of tariff lines for duty reduction/elimination. While the EHS will be implemented within the next few months, the negotiation process is expected to be complete by the end of 2022 or the start of 2023.

Advantages to India

India is not in the top 10 countries in terms of imports into the United Kingdom. China, the United States and some EU countries have much higher imports into the United Kingdom compared with India. While the United Kingdom has an operational trade agreement with the European Union, neither China nor the United States have an operational trade agreement with the United Kingdom. Further, EU countries have geographical location and logistics advantage over India. The India-UK FTA shall therefore provide India with an advantage over China and the United States in terms of its exports to the United Kingdom.

With regard to the duty profile of goods imported into the United Kingdom, there is 0% most-favoured nation (MFN) duty on about 34% of tariff lines. On another 10%, MFN duty is less than 1%. The remaining 56% of tariff lines attract more than 1% MFN duty in the United Kingdom. Out of those, around 27% of tariff lines attract more than 5% MFN duty.

Among the products that attract more than 5% duty in the United Kingdom, and which it primarily imports from China and the United States, are:

  • plastic articles;
  • food preparations;
  • insecticides;
  • alcohol;
  • animal feed;
  • articles of aluminium and aluminium alloys;
  • textile articles;
  • tableware and kitchenware and
  • polymers.

India has large global exports of these products. The inclusion of them in the United Kingdom's positive offer list to India will clearly give a price advantage to India over China and the United States.

Opportunities of India-UK FTA

Certain goods, such as dairy products, alcohol and food products, do not meet UK standards, and face either a complete ban or non-tariff barriers in the United Kingdom. If the India-UK FTA is negotiated in the right framework, both countries can make it more comprehensive by including recognition of each other's standards and testing methods, the exchange of technology, joint research and development, and investment.

Further, India and the United Kingdom may consider doing away with non-tariff barriers under an extended FTA, leading to a comprehensive agreement.

Current challenges

Since the objective of FTA is to reduce or eliminate duties on goods, it will not relax other regulatory requirements in the countries. Some such requirements would restrict exports from India to the United Kingdom even after tariff concessions.

India might also face similar challenges in its negotiations as it faced in the India-EU BTIA.

The United Kingdom's exit from the European Union has left the country with limited resources. It no longer enjoys the benefit it previously had under the customs union. While the European Union's resources would previously have been accessible to India due to the United Kingdom being part of the European Union, in the current scenario India might be able to leverage the benefits of resource allocation and resource availability within the United Kingdom only.


The India-UK FTA would of course strengthen the relationship between both countries and can even lead to a more comprehensive agreement. Further, while tariff concessions would help the industry in both countries to have better market access and advantage over competing countries, a realisation of the benefits is expected to take its own time. Meanwhile, both countries would also be able to ascertain the advantage of having a deeper liberalisation by including investments, resource exchange and elimination of non-tariff barriers, among other things, and assess possibility of a comprehensive agreement.

For further information on this topic please contact Nihit Gupta at TPM Solicitors & Consultants by telephone (+91 11 4989 2200) or email ([email protected]). The TPM Solicitors & Consultants' website can be accessed at