The beginning of a fresh chapter: What the UK-India trade deal means for businesses in both countries

Jeanne Loganbill
5 days ago
4 min read

There's no greater test of diplomacy than negotiating a historic deal. It takes real understanding, empathy, and a common purpose to shape a mutually beneficial agreement that everyone can stand behind. Skilful discussion takes time, but the results are worth the effort.

With that in mind, we're delighted to hear that the long-anticipated UK-India trade deal has now been agreed. After three years of extensive dialogue, this marks a meaningful win for both countries.

Let's look at how businesses in the United Kingdom and India stand to benefit from the agreement after it comes into force.

What does the trade deal mean for businesses in India and the UK?

Trade between India and the UK has long been a cornerstone of global commerce, with the UK importing all kinds of goods, including pharmaceuticals, textiles, gems, mechanical appliances and other products from India. In turn, India regularly buys machinery, automotive parts, electronic equipment, chemicals and beverages – including Scotch whisky – from the UK.

Services factor into imports and exports, too, with India and the UK working hand in hand in several important sectors, including financial services, information technology and engineering.

In 2024, exports and imports between the UK and India totalled an impressive £42.6 billion, representing an increase of £3.3 billion over 2023.

In real terms, the new trade deal will create a better environment for small, medium-sized and large businesses in both countries. Tariffs between the two countries have been overhauled, with Indian exporters benefitting from relaxed rules on seafood, clothing and footwear exports to the UK.

Indian consumers should see cheaper prices on cosmetics, chocolate, electrical items, soft drinks, salmon and lamb.

Meanwhile, British businesses will find it easier to enter the Indian market, with whisky and gin tariffs initially halving from 150 to 75% before reducing to 40% after 10 years, and automotive tariffs going from 100% to less than 10% under a quota system.

As a result of the deal, consumers in the UK could pay less for textiles, shoes, frozen prawns and other food products.

What does the future hold for UK-India trade?

Overall, the deal is expected to boost bilateral trade by as much as £25.5 billion for the world's fifth and sixth-largest economies annually in the long run. That should eventually increase the UK's GDP by up to £4.4 billion and wages by £2.2 billion every year.

A full 90 per cent of Indian current tariffs have been cut, with about 85 per cent of lines becoming tariff-free within the next ten years. UK companies will gain an edge over businesses entering India's booming market, which is expected to become the world's third-largest economy before the end of the decade.

"The new trade deal means a better trading environment for Indian firms in the UK and market certainty for UK firms trading in India, which is excellent news," says Interpolitan CEO Rishi Patel. "I'm excited on behalf of all businesses, including those in the financial services sector. The reduction in trade barriers and tariffs this deal brings will create a more streamlined and cost-effective environment, opening up significant opportunities for expansion and stronger ties for both UK and Indian players in a range of vital industries."

Interpolitan COO Anoop Nair agrees. "The UK-India FTA is more than a trade pact – it's the gateway to a new era of cross-border financial connectivity," he explains. "As tariffs fall and trust rises, we'll see capital, credit and compliance frameworks become more fluid across both jurisdictions. For fintechs, wealth managers and global banking partners, this deal lays the groundwork for scalable, cross-border ecosystems that serve the rising needs of Indian UHNIs, family offices and institutional clients looking west, and equally, British capital deepening its comfort with India. It's a win not just for exporters of goods but for exporters of capital and capability."

The finalisation of this historic trade deal comes soon after the announcement of £400 million in trade and investment deals as the result of the 13th UK-India Economic and Financial Dialogue in April.

As one of 20 companies included in the £128 million export deals and investments package revealed by the joint HM Treasury and Department for Business announcement, we see the new trade agreement as a clear signal of the exciting potential that lies ahead for businesses operating between the UK and India.

Building bridges to long-term growth

This historic UK-India trade deal lays the foundation for decades of enhanced economic cooperation. By dismantling barriers and creating a streamlined trading environment, both nations are investing in a future of shared prosperity.

For businesses in the UK and India, this is an invitation to explore new horizons and deepen existing relationships. We look forward to playing a part in the next stage of UK-India economic collaboration by providing our clients in both regions with the strong financial solutions they need to make the most of this significant agreement's long-term potential. Here's to the future and all the promise it holds.

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