After more than a year of negotiation, India and the United Kingdom have concluded a major Free Trade Agreement (FTA). While news reports often highlight headline figures — like tariff cuts or potential GDP gains — the real value of this deal goes deeper. It’s about how two large economies can work together to shape the future of manufacturing, innovation, and industrial growth.
For India, this is a chance to connect its “Make in India” ambitions with global value chains.
For the UK, it’s about building long-term partnerships in a market full of growth potential.
This is more than a trade document — it’s a strategic framework that, if executed well, could redefine economic cooperation.
For India: A Clearer Runway to Global Markets
India’s “Make in India” programme aims to boost domestic manufacturing and make India a global production hub. The FTA supports this goal by removing tariffs on 99% of Indian exports to the UK. For sectors like auto parts, machinery, pharma, food processing, textiles, and renewable energy components, this can open doors to new customers and improved pricing.
But this shift is about more than just cost. It’s also about credibility. When backed by a formal trade framework, Indian firms gain trust in global markets. Take auto components, for instance: without the 10% UK tariff, Indian suppliers can become more competitive and better integrated into European supply chains.
Still, there are challenges. Many Indian firms — especially small and mid-sized ones — face issues like delayed customs clearance, inconsistent quality standards, or export documentation hurdles. To benefit fully, India will need to strengthen its logistics, testing infrastructure, and export facilitation services.
Indian exporters will need to align with UK product safety and technical standards. This includes CE marking for machinery, REACH compliance for chemicals, and Good Manufacturing Practices (GMP) for pharma. Support from Indian trade bodies and clearer guidance can help firms make this transition smoothly.
For the UK: From Exporter to Embedded Player
The FTA isn’t just about helping UK exporters sell more goods. It also offers them a way to become part of India’s manufacturing ecosystem.
Under India’s public procurement policy, any foreign firm that adds at least 20% value locally can be treated as a “Class II” local supplier. Thanks to the FTA, UK firms now qualify — opening access to India’s ₹4 lakh crore public procurement market in areas like infrastructure, clean energy, defence, and healthcare.
This makes India not just a sales destination, but a production base for UK companies looking to serve both India and other Asian markets.
UK firms will need to navigate India’s investment, tax, and land-use regulations. Regulatory processes — such as those under the Companies Act, Environment Impact Assessment norms, and local GST rules — vary by state. Setting up local advisory support or partnerships will be key to smooth entry and compliance.
Sectoral Overlap: Where Industrial Policy Meets Trade
The FTA fits neatly with India’s Production Linked Incentive (PLI) schemes, which offer financial incentives in sectors like EVs, electronics, pharma, textiles, and medical devices. These are also areas where the UK has advanced technology and a desire to partner.
This creates a win-win dynamic:
- In EVs, the UK can provide battery and powertrain technology; India brings scale and manufacturing.
- In pharma, faster regulatory approvals help both countries export more.
- In medical tech, co-development is now easier due to improved IP protection and market access.
But alignment on paper doesn’t always translate into action. Success will depend on forming joint ventures, setting up local manufacturing, and sharing R&D.
Regulatory Insight: India’s PLI schemes come with eligibility criteria — such as minimum investment amounts, localisation levels, and compliance reporting. British firms or joint ventures need to track these closely to access incentives. Both governments must also align certification and regulatory procedures to avoid duplication and delay.
Innovation: The Next Frontier of the FTA
One of the most forward-looking aspects of the FTA is its attention to digital trade and innovation. It goes beyond goods and looks at how the two countries can collaborate in areas like:
- Clean energy (green hydrogen, solar tech)
- FinTech and digital payments
- Intellectual Property (IP) protection
- R&D partnerships in MedTech and semiconductors
For India, this offers a path to co-develop technology, especially with UK universities and research firms. For the UK, it’s a way to plug into India’s fast-moving, cost-efficient innovation landscape.
Regulatory Insight: The FTA introduces a framework for IP protection and digital trade rules — like data localisation, cybersecurity cooperation, and mutual recognition of standards. For startups and R&D institutions, this provides legal clarity and operational stability.
Challenges: Between Paper and Practice
As promising as the FTA is, certain barriers will need to be tackled:
- Regulatory mismatches: Food, electronics, and pharma still face differing safety or labelling standards.
- Infrastructure issues: Port delays and customs backlogs can reduce the benefit of duty-free trade.
- Awareness gaps: Many SMEs in both countries may not understand how to take advantage of the deal.
These are not deal-breakers, but they do slow things down. Governments will need to invest in trade facilitation, digital platforms, regulatory training, and B2B matchmaking services.
Conclusion: A Strategic Starting Point
This FTA is not just about tariffs and trade figures. It’s a broader effort to build long-term, resilient partnerships.
For India, it offers a boost to Make in India by connecting local capabilities with global demand.
For the UK, it’s a route to become part of a rising industrial economy, not just a supplier to it.
For both, it’s a platform to test how trade can support innovation, co-creation, and sustainable growth.
But the FTA is only the beginning. Execution, support systems, and regulatory clarity will determine how far it goes.
Stay tuned — the Magi team is unpacking sector-by-sector insights in our next briefing. From clean tech to consumer goods, we’ll track the numbers, the opportunities, and the risks — so your strategy stays ahead of the curve.
Until then, as always: Watch the data. Understand the details.