What's in the UK and India's historic trade deal?

The UK and India announced on 6 May that they had concluded talks on a comprehensive free trade agreement (FTA) and, as both nations now work together to finalise the legal text, businesses can start to explore the new opportunities made possible by the market access provisions.

Negotiations on the deal began in January 2022 after the UK's final exit from the European Union and were resumed in February 2025 following a bilateral meeting between Sir Keir Starmer and Prime Minister Narendra Modi at the G20 summit in late 2024.

Once the treaty text is signed, the deal will enter into force after both the UK and India have completed their ratification processes.

The FTA is described by the UK government as "the best deal that any country has ever agreed with India" and by the Indian government as "historic and ambitious", catalysing "trade, investment, growth, job creation, and innovation in both our economies".

FTA coverage

Although the text of the legal agreement has not yet been finalised, the UK government has published a detailed summary of each of the deal's chapters.

The summary indicates that the agreement covers areas typical to an FTA, including on market access for goods, trade in services, digital trade, environment, labour, procurement, sanitary and phytosanitary issues, and small businesses, as well as trade remedies provisions.

With the final text of the treaty now pending, what are the principal features of this "historic deal"?

UK export trade

The FTA will significantly reduce tariffs on some UK exports to India, including whiskies, cosmetics and toiletries, medical technology and advanced machinery. From day one, businesses will benefit from tariff cuts worth £400 million annually, increasing to £900 million after 10 years.

The UK Department for Business and Trade (DBT) estimates a 59.4% increase in UK exports to India, amounting to £15.7 billion in 2040 values. This substantial growth is attributed to the reduction in tariffs and non-tariff measures contained in the FTA, including simplified customs procedures, which should facilitate faster, smoother trade flows and lower administrative costs for exporters.

Additionally, the deal secures rules of origin terms which should facilitate improved access to the Indian market for a range of British products.

India trade

The FTA is set to reshape supply chains by making India a more competitive sourcing and manufacturing base for UK businesses. The elimination of tariffs on 99% of Indian exports to the UK, according to the DBT, along with simplified customs procedures, is expected to enable Indian exporters to integrate more efficiently into UK supply chains and reduce overall costs. As a result, UK buyers may shift sourcing from other Asian markets such as China and Bangladesh to India, drawn by zero-duty access and enhanced cost efficiency.

The DBT’s preliminary estimates indicate a 25% increase in UK imports from India, valued at £9.8 billion in 2040 terms. Sectors expected to benefit include textiles, marine products, leather goods, engineering goods, auto components and chemicals.

On the import side, tariffs on UK goods entering India will be reduced gradually. Duties on Scotch whisky and gin, for example, will fall from 150% to 75% initially, and further to 40% over a decade. Tariffs on luxury UK cars will be reduced from over 100% to 10% under a quota system. These changes are anticipated to significantly enhance market access for iconic British brands in India’s expanding consumer market.

UK services

UK services sectors should benefit from greater market certainty when trading into the growing Indian market. The FTA includes a professional services annex, identifying UK and Indian bodies to negotiate mutual agreements or arrangements for the recognition of professional qualifications, streamlining the process for professionals seeking recognition of their qualifications in both countries.

Sectors set to benefit include telecommunications, environmental services and construction services. UK financial services firms should receive equal treatment with domestic suppliers in India, with foreign investment caps locked in at up to 74%. The agreement promotes cooperation on fintech, cross-border electronic payments and financial stability, with the aim of supporting innovation and market integration.

The deal also ensures UK companies can deliver financial services to clients in India, supporting the long-term competitiveness and stability of the UK’s financial services sector. This includes non-discrimination rules to ensure UK firms are treated fairly when providing services into the Indian market.

India services

The FTA facilitates easier mobility for Indian professionals to the UK, including contractual service suppliers, business visitors, investors, intra-corporate transferees and independent professionals such as yoga instructors, musicians and chefs, along with provisions for dependents and work rights.

India's service sectors, including IT and IT-enabled services, financial, professional and educational services, stand to gain immensely from the improved market access in the UK. Additionally, the agreement includes provisions for mutual recognition of professional qualifications, further easing cross-border service delivery and job creation for India’s skilled workforce.

UK digital trade

The FTA aims to reduce barriers to digital trade and promote compatibility of digital trading systems, including supporting the legal recognition of electronic contracts and electronic authentication.

The UK government states it has secured India’s "best ever commitments on digital trade" for the UK's digital and technology sectors, promoting digital systems and paperless trade, helping UK businesses of all sizes seize opportunities in this rapidly expanding market.

India's digital economy

The FTA’s digital trade measures should boost trust in online transactions, and benefit India’s growing digital economy and tech-enabled services. 

Legal recognition of electronic contracts and authentication simplifies compliance for Indian exporters in IT, fintech and e-commerce. Protecting against forced source code transfer should give greater confidence for Indian tech firms operating in the UK and consumer safeguards around unsolicited communications will strengthen trust in India’s e-commerce landscape.

While cross-border data flows are not liberalised immediately, the FTA establishes a framework for future cooperation on data governance, supporting long-term growth in digital trade. Overall, the FTA creates new channels for small and medium-sized enterprises in India to access global markets and supports startup ecosystems in both countries.

UK procurement

The FTA guarantees what the UK government describes as "unprecedented access to the Indian government procurement market" for UK businesses, comprising approximately 40,000 tenders worth at least £38 billion annually. UK businesses should be able to compete for a broad variety of goods, services, and construction procurements from the majority of central government entities in India, as well as several of India’s federal state-owned enterprises, at thresholds lower than before.

The FTA also grants UK companies exclusive treatment under the "Make in India" policy, providing preferential status for products and services with at least 20% UK content.

India's suppliers

Indian suppliers will gain enhanced access to major UK public procurement projects under the FTA. Provisions promoting non-discriminatory treatment and transparency in tenders will allow Indian businesses to compete more effectively in the UK market.

This improved access opens up opportunities in infrastructure, public services and technology, strengthening India’s role as a global sourcing partner for public sector needs in the UK.

UK intellectual property

The FTA secures enhanced copyright protections for the UK creative sector, giving exporters greater confidence with India’s commitment to protect their work for at least 60 years. The deal addresses interests of UK creators, rights holders and consumers, including public performance rights and artist resale rights.

The FTA also improves patent protections for UK businesses, reducing administrative burdens, speeding up processes, and ensuring transparency and legal certainty in the patent system.

The UK will have the ability to apply for India’s highest standard of protection for all UK geographic indicators listed for protection in the FTA, extending this beyond wines and spirits, currently the only products benefiting from the higher standard.

IP certainty for India

The FTA promotes alignment with global IP standards, offering greater certainty for innovators and exporters. Indian businesses will benefit from this stronger and more predictable IP framework, encouraging investment in technology, pharmaceuticals, creative industries and R&D.

Enhanced copyright and patent protections are also expected to foster collaboration in content creation, research, and product development, strengthening India’s position in IP intensive sectors.

People and employers

One of the central features of the FTA is the Double Contribution Convention (DCC), which exempts Indian workers temporarily posted in the UK and their employers from paying UK social security contributions for up to three years.

The DCC is expected to reduce employment costs and enhance the competitiveness of Indian firms, particularly in sectors such as IT, consulting, and finance, while ensuring that benefit entitlements in the home country remain unaffected. It aligns with the UK’s existing Social Security Agreements and will come into force alongside the broader FTA.

By lowering the administrative and financial barriers to cross-border mobility, the DCC is likely to facilitate greater access for Indian professionals to the UK labour market and significantly enhance their mobility.

Osborne Clarke and BTG Advaya comment

Although the final agreement has yet to be published, businesses can now begin to assess and review the impact of reduced tariffs on their products and explore the new opportunities made possible by the FTA's market access provisions.

Businesses in India can also consider the FTA's implications, for example for supply chains, in light of the Trade and Economic Partnership Agreement, or TEPA, signed between India and the European Free Trade Association States (comprising Iceland, Liechtenstein, Norway, and Switzerland) in March 2024.

However, FTAs do not function on autopilot. Historically, India’s FTA utilisation has been relatively low due to administrative hurdles, limited awareness and complexity. The UK has also faced similar challenges in the post-Brexit trade environment. For this FTA to deliver its full potential, businesses must actively engage, understand the provisions and build compliance capacity to make real use of the opportunities.

BTG Advaya is Osborne Clarke's "best friend" firm in India and its Head of Tax Practice Amit Kumar Baid co-authored this Insight.

This Insight was drafted with the assistance of Michelle Tong, Paralegal at Osborne Clarke.