A Step in the Right Direction: The India-UK Free Trade Agreement Pranay Sen
- Pranay Sen
- 9 hours ago
- 7 min read
In 2024, the total value of goods and services in the United Kingdom was over £900 Billion. A little less than 2% of those came from India and their total value was £45 Billion. Now, the two countries have signed a Free Trade Agreement which - in the short run - can increase that £45 Billion by over an additional 50%.
For a little bit of background on this deal, it was signed on July 24, 2025 during Indian Prime Minister Narendra Modi’s visit to the UK. It was signed in UK Prime Minister Keir Starmer’s residence: Chequers. The agreement was in the works for the past three years and through negotiations, it finally came to be in 2025. It was a goal for the UK for a long time to sign this agreement and was a good step forward for both countries. The overall goals for this agreement were to increase economic growth for both countries, double bilateral trade and create opportunities in a country like India for the general population in tech, textiles and automotive industries.
For the United Kingdom, this deal cuts taxes on many Indian goods which they import including clothing and footwear, some food products, jewelry, gems and some cars. For India, this deal cuts taxes on goods which they import from the UK such as cosmetics, scotch, whisky & gin, soft drinks, higher value cars, lamb, salmon, chocolate and biscuits, medical devices, aerospace and electrical machinery.
The two countries signing this agreement will benefit both of them greatly. With less taxes being put on these popular goods being imported by either country, their market price will go down, in turn, increasing demand for these products, fostering more trade between the two countries. The UK already sees itself spending an additional £25.5 Billion on imports from India which will help the two countries maintain a strong relationship. This trade agreement has the potential to make the UK more attractive to an Indian employee seeking a foreign employment opportunity because of the comfort it brings knowing they’ll get their home country’s goods in the UK, As it can be seen in the grade below, UK’s Foreign direct investment in India has been going up with a small downturn between 2022 and 2023. Now, with the opportunity to have more interaction with India, it is very likely that the trade deal will give them the opportunity to invest more in India as trade will be a lot smoother.
This deal has the potential to change both economies and will add to the UK’s GDP. It will also open up new markets, diversify supply chains and make the two economies more interdependent. It gives small businesses in India the chance to work together and provide more products to help deal with the potential increase in demand for products in the UK that are of Indian origin. This deal also expands the market for Indian goods which aren’t able to be brought into the United States.
Personally I am a huge supporter of imported goods and use a lot of them in my daily life. That leads me to support the agreement as it allows for easier access in both countries to some necessary goods which improve the quality of life.
But, overall, in my opinion, one of the most impactful implications of this agreement are the jobs which will be created, especially for people in India. With more demand for Indian goods, suppliers will be able to create more jobs to lift more Indians out of the poverty line. Currently, about 23.9% or 330 million Indians, live below the international poverty line and this deal has the potential to create a number of jobs in a country like India so that more people can rise above the poverty line.
This deal also has the potential to bring more people from India to work in the UK, creating more opportunities for Indian people who are trying to break into higher paying jobs in both white collar and blue collar professions. For example, with more Indian food being brought over from India to the UK, it can be made more attractive for the Indian people who are a little more fearful than the rest to get out of their comfort zone as that comfort and satisfaction which they receive in India is becoming more similar in the UK. In the US, it can be seen that many people of Indian origin have come to the country and have made a significant impact on the country economically and have been able to lead better lives than they would’ve in India. It has also been made known that while Indians make up 1% of the US population, they pay 6% in taxes which goes to show the level of work which they are capable of doing when in a different, developed country. This would be beneficial for both Indian people and the economy of the UK.
The final major benefit I see arising from this trade deal is the improvement of medical devices being brought into India. The UK has a very good market of medical devices and India could really benefit off of them. With increased access to such medical devices, there is an opportunity for better quality of life for Indian citizens which would, once again, benefit India greatly as a better healthcare system would make them more developed than they already are. All of these
trades would make both countries a better place to live in and would truly benefit the economy greatly which is why signing such a deal is truly a good idea for both countries.
The biggest argument one may have with the deal is money. While this deal provides numerous benefits to either country, it should be made known that India benefits - to a great extent - from tariffs placed on imports from the UK. Now, while the UK has many other sources of making that revenue, India is not at that level where they are making a ton of money without the tariffs. Now, there is a lot of projected benefit which will come from this deal, however, none of it is certain so there is a small chance that India loses money on this agreement, rather than making money. However, I feel that with this deal in place, it is likely that India will make more money just because they will be exporting a lot more and at a more consistent frequency, which they didn’t have before. So, with this taken into account, while it is a very valid reason to have doubt, in the long run, this deal can make India less dependent on tariffs and bring them a lot more money than before. This is the biggest doubt that would have to be cleared with a trade deal like this between a country like the United Kingdom and a country like India.
Another argument which could be brought up is the fact that with increased importing of alcohol, the overall health of the Indian population could be brought to a lower standard. In India, there is a huge struggle for people below the poverty line with alcohol as it has led many people to being at the lower end of the socio-economic ladder. Now, with the easier access to alcohol, it is normal for people to think that the ones below the poverty line will have more access as an indirect consequence. However, it is important to note that imported alcohol in India is always sold at a higher price than locally produced brands. While more people will have access to British alcohol, they will also have to pay a higher price for this alcohol since in the UK, the price of alcohol is generally higher than it is in India and India will still be paying at least sticker price for these products. So, it isn’t a concern that people below the poverty line will have easier access to these goods and become addicted to them as you’d have to be earning money to be able to afford them. Also, with more jobs being created as a result of this deal and with a reason for people to be busy, there isn’t much reason as to why these people would become more addicted and actually makes a case for them to become less dependent on substances to improve their happiness.
To wrap up, this deal would be very beneficial for the two countries involved. It will bring both countries closer and give them more reasons to have positive interactions with each other which will be very good for either side. It will also give more people from India a reason to go to the UK and benefit their economy or get jobs in India benefitting India’s economy greatly, lifting people out of poverty. So, in my eyes, this deal was a great idea and the UK should consider signing more deals like this with developing countries to help them grow while also growing themselves.
References:
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