UK–India Free Trade Agreement Comes into Force, Opening a New Chapter in Bilateral Trade and Investment

The UK–India Comprehensive Free Trade Agreement (FTA) entered into force on 15 July 2026, bringing into effect one of the most significant trade agreements between the two countries. Following the conclusion of negotiations in July 2025, the agreement provides for the elimination or substantial reduction of tariffs across the vast majority of bilateral trade. According to UK Government estimates, it could increase bilateral trade by around £25.5 billion annually and boost UK GDP by approximately £4.8 billion in the long run. The agreement also provides duty-free access for around 99% of Indian export lines entering the UK while reducing tariffs on a broad range of UK exports to India. Prime Ministers Narendra Modi and Keir Starmer have described the agreement as an important milestone in strengthening the bilateral economic partnership.

Broad tariff liberalisation across key sectors

The agreement substantially reduces tariffs across a wide range of sectors, improving market access for businesses in both countries. India will eliminate duties on around 99% of its tariff lines, covering almost the entire value of its exports to the United Kingdom. This provides enhanced access for sectors including textiles, leather, gems and jewellery, engineering goods, chemicals, marine products and footwear.

PM Narendra Modi on the India UK FTA.

The UK has also removed or reduced tariffs on a range of Indian products, including clothing, footwear and selected food items. For British exporters, duties on whisky will gradually fall from 150% to 40%, while tariffs on automobiles will reduce from 100% to 10% under a quota mechanism. Tariffs on cosmetics and certain agricultural products will either be eliminated immediately or phased out over agreed timelines. Overall, the agreement liberalises more than 99% of UK tariff lines and around 90% of Indian tariff lines, creating a more predictable trading environment for exporters and importers.

Industry welcomes implementation

Industry bodies have welcomed the operationalisation of the agreement and highlighted its potential to strengthen bilateral commerce.

FICCI Secretary General Anant Swarup said the agreement would enhance India's participation in global value chains while encouraging innovation-led growth and greater competitiveness. ASSOCHAM President Nirmal Kumar Minda described the agreement as a significant milestone in India's free trade engagement, noting that 99 per cent of Indian exports will now enjoy duty-free access to the UK market. The Trade Promotion Council of India also said the agreement provides greater market access, increased predictability and a level playing field for Indian exporters.

Labour-intensive sectors such as textiles, leather, marine products, footwear, sports goods and gems and jewellery are expected to benefit alongside engineering goods, auto components and organic chemicals. The agreement also expands opportunities in services by providing improved market access for IT and ITeS, financial services, professional services, business services and educational services.

A dedicated financial services chapter, the first of its kind for India in a trade agreement with the UK, provides long-term legal certainty for financial institutions, including banks, insurers and fintech companies. The agreement also opens access to government procurement opportunities, allowing eligible UK businesses to participate in India's central government procurement market under agreed conditions.

Leaders discuss implementation at UK Parliament

Ahead of the agreement's entry into force, policymakers, parliamentarians and business leaders gathered at the UK–India Leaders Conference 2026, organised by the Europe India Centre for Business and Industry (EICBI) at the UK Parliament in London on 13 July. Held under the theme From Agreement to Action: Unlocking the UK–India FTA, the conference focused on implementation, investment opportunities, regulatory cooperation and industry preparedness.

The discussions reflected the importance of ensuring that businesses, investors and institutions are prepared to utilise the agreement effectively as it enters into operation, while reinforcing wider economic cooperation between the two countries.

Services, mobility and social security

Beyond trade in goods, the agreement includes commitments covering services, professional mobility and digital trade. It simplifies entry procedures for contractual service suppliers, intra-corporate transferees, business visitors, investors and independent professionals, including occupations such as yoga instructors and chefs.

Alongside the FTA, the Double Contribution Convention provides an exemption of up to three years from simultaneous social security contributions for eligible Indian professionals temporarily working in the UK and their employers. Corresponding provisions also apply to eligible UK nationals working in India, helping to reduce duplicate social security payments during temporary assignments.

The agreement further promotes paperless trade and cooperation in areas including advanced telecommunications, clean technologies and innovation, while providing greater certainty for businesses delivering technology, financial and professional services across both markets.

Businesses prepare to utilise the agreement

Following ratification by both countries, authorities have introduced guidance and administrative measures to facilitate implementation. UK businesses have been encouraged to complete registration with His Majesty's Revenue and Customs (HMRC) to access preferential tariff rates under the agreement, while exporters in India will need to comply with applicable rules of origin and customs requirements to qualify for preferential treatment.

Officials have also highlighted simplified customs procedures and greater use of digital documentation as measures designed to improve utilisation of the agreement, particularly among small and medium-sized enterprises. As implementation begins, governments, businesses and industry organisations will closely monitor the agreement's operation and work towards maximising the commercial opportunities created through closer UK–India economic cooperation.