FTA with UK marks India’s maturing global presence, readiness to lead growth

India and the United Kingdom have finalised a landmark Free Trade Agreement (FTA), offering zero-duty access to nearly 99% of Indian tariff lines and significantly boosting bilateral trade and investment. This FTA marks India’s strategic shift from protectionist trade policies to value-based global trade leadership.

Strategic Gains for Indian Goods and Services Exports

• Tariff Elimination for Indian Exports: The FTA removes up to 12% tariffs on Indian exports such as textiles, apparel, marine products, leather, and toys, placing India on par with competitors like Bangladesh and CPTPP countries in the UK market.
• Balanced Market Access: India has allowed phased, duty-free access to 85% of UK products over 10 years, while strategically protecting sensitive sectors like dairy, edible oils, smartphones, and medical devices, ensuring domestic industries are shielded.
• Services Sector Advantage: Indian IT, telecom, education, and finance services gain enhanced UK market access, with new provisions for talent mobility and professional recognition, giving a global edge to Indian service providers.

Structural & Institutional Reforms in the FTA:

• Double Contribution Convention: The agreement includes a first-of-its-kind social security waiver, eliminating UK social security contributions for Indian professionals on temporary assignments, reducing overhead costs for Indian companies.
• Recognition of Qualifications: Mutual recognition of professional qualifications for Indian architects, accountants, engineers, and educators facilitates seamless entry and employment in the UK.
• Inclusion of ESG and Compliance Norms: The FTA incorporates chapters on labour rights, environmental protection, gender equity, and anti-corruption signalling India’s readiness for global trade standards based on ethics and sustainability.

Long-term Opportunities and Industry Responsibilities:

• Joint IP and R&D Ecosystem: The FTA promotes co-manufacturing, joint research, and innovation by combining UK strengths in design and India's scale and talent, driving forward value chain integration.
• Market Strategy Realignment: Indian firms must adopt UK-specific strategies focused on brand localisation, regulatory compliance, and premium product positioning to sustain competitiveness.
• Alignment with Viksit Bharat Vision: The FTA aligns with India’s long-term economic vision of transforming from a cost-driven export base to a high-value, brand-driven global economic leader.

Practice Question:

Q. "The India-UK Free Trade Agreement (FTA) not only enhances market access but also reflects India’s transition towards value-based global trade. Critically analyse the potential of this FTA in reshaping India’s export ecosystem and strengthening bilateral economic ties."