Sectoral Power Plays: How India & the UK Are Rewiring TradeIntroduction: From Fractured to Flourishing
It’s the end of April 2025, and the global trade winds howl with chaos. In Washington, headlines blare: the US has slapped 60% tariffs on Chinese electronics and 100% on electric vehicles, pushing giants like Tesla and Apple to seek new horizons.
India, with its 7% GDP growth and a workforce pulsing with ambition, steps into the spotlight. Across the Atlantic, the UK, unshackled from Brexit and hungry for new alliances, turns eastward.
Enter the India–UK Free Trade Agreement (FTA)—not just a deal, but a blueprint for rewiring global commerce. After 14 bruising negotiation rounds since January 2022, it stands on the brink of signing, with only a Bilateral Investment Treaty (BIT) and a social security “Double Contribution” pact pending. Rumors are swirling, with Politico reporting that the UK and India are on the cusp of a breakthrough after a two-day negotiating sprint in London. With just one or two sticking points left—like the unresolved issue of worker contributions—the deal feels closer than ever.
But this isn’t just about tariffs and technicalities. It’s about industries—large, medium, and small—ripping open new possibilities. It’s about sectoral revolutions, supply-chain rewiring, and the kind of cross-border growth the world hasn’t seen in decades.
This is the story of opportunity, ambition, and bold moves.
Let’s step into this evolving tale.
Sectoral Power Plays: How India & the UK Are Rewiring TradeBenefits for the UK and India: A Shared Path to Prosperity
The UK-India FTA is more than a tariff-reduction exercise—it is a strategic alignment of two complementary economies charting new growth trajectories. As the UK seeks global economic renewal in the post-Brexit era, and India scales its manufacturing and digital potential, this partnership creates opportunity where ambition meets access.
Sectoral Power Plays: How India & the UK Are Rewiring TradeUnlocking Scale and Strategic Certainty
- The UK’s small and medium enterprises (SMEs) are central beneficiaries. From Birmingham’s advanced manufacturing units supplying aviation components to Manchester’s textile firms pivoting to sustainable sourcing, the FTA removes longstanding friction. Tariffs on industrial machinery are eliminated, customs processes are streamlined, and legal safeguards now reduce policy risk in India—long a barrier for British investors.
- India’s rising aviation demand—underscored by IndiGo’s 200-plane order in 2024—translates to a growing market for UK-made engines and components. With trade protections and sector-specific commitments in place, the UK is well positioned to tap into India’s $1 trillion consumer base.
- Green energy and digital finance are emerging focal points. Scotland’s renewable firms now access India’s $500 billion clean energy roadmap with stronger legal and financial backing. Meanwhile, UK-based fintech players are actively integrating with India’s UPI ecosystem, processing over 5 billion monthly transactions. Visa relaxations and regulatory collaboration enable talent flow and platform scale—two enablers for projected £20 billion in robo-advisory assets by 2027.
- Pharmaceutical exports are another win. British firms now save up to £50 million annually through faster regulatory approvals for the Indian market, while Indian suppliers to the NHS benefit from expanded tariff-free access. Overall, UK exports to India hit £17 billion by September 2024—a 17% year-on-year growth—driven by better market clarity and a rules-based trade framework.
- For India, the FTA opens premium markets while deepening its industrial and export credentials. The textile sector leads the way: cities like Tiruppur and Surat are scaling exports to the UK’s £9 billion apparel market with zero tariffs. UK consumer preference for sustainable brands (60% in 2024) has lifted demand for India’s eco-textiles by over 30%. New investments into MITRA parks, backed by ₹4,445 crore, aim to solidify India’s position as a green textile powerhouse.
- Manufacturing is witnessing global recalibration—with India gaining. Gujarat’s assembly lines now produce the iPhone 16 as Apple shifts 10% of its production to India. The FTA supports this shift by removing tariffs on electric vehicle components and creating pathways for $5 billion in UK investments. India’s Production Linked Incentive (PLI) schemes are seeing momentum from these tailwinds—driving job creation and lifting the export target of $500 billion by 2030.
- In pharmaceuticals, India deepens its role as a reliable health supplier. Tariff-free exports to the UK reached $948 million, with accelerated approvals via the UK’s MHRA opening pathways to the wider EU market. Hyderabad’s pharma firms now supply one in three NHS pills—a statistic underpinned by regulatory trust and price competitiveness.
- Green infrastructure is another shared priority. Rajasthan’s UK-funded solar farms and Adani Green’s $500 million initiative create 10,000 jobs while aligning with India’s net-zero 2070 goal. Indian fintech players, backed by UK capital, are also scaling up digital finance solutions for climate-linked lending and infrastructure funding.
- Taken together, the FTA is projected to boost India’s GDP by £3 billion, while building a bridge between local manufacturing ecosystems and global value chains.
Sectoral Power Plays: How India & the UK Are Rewiring TradeAutomotive: Shifting Gears in the UK–India FTA
The automotive sector is set to become a critical gear in the UK–India Free Trade Agreement (FTA) engine. Both sides are eyeing opportunities — and clearing roadblocks — that could reshape the market for vehicles and electric vehicles (EVs) alike.
On the UK side, Britain’s iconic automotive brands — Jaguar Land Rover (JLR), Rolls-Royce, McLaren — are looking east. With India’s middle class expanding and consumer aspirations rising, demand for premium vehicles and cutting-edge EVs is surging. However, steep Indian tariffs, ranging from 110% to 170%, have kept most British vehicles out of reach.
Recognizing the opportunity, UK negotiators are pushing for deep tariff cuts, especially for luxury cars and EVs. British firms aren’t just aiming to sell vehicles — they are also exploring investments across India’s evolving auto ecosystem, from engines and connectivity tech to R&D partnerships. From India’s perspective, the story is dynamic. The government’s aggressive EV push — from affordable models led by Maruti Suzuki and Mahindra to premium offerings like Tata’s Jaguar I-Pace — means access to global EV models and technology is strategic. Lowering tariffs could accelerate India’s EV goals and strengthen domestic innovation.
At the same time, Indian automakers are stepping onto the world stage. Mahindra, Maruti, and Tata Motors are expanding EV production with an eye on UK and European markets. Greater access to the UK through a favorable FTA — particularly for affordable EVs — would support India’s export ambitions. Key FTA Provisions Being Negotiated:
- Unlimited UK EV imports priced above £80,000 into India.
- Easier access for Indian EVs priced below £40,000 into the UK.
- Phased tariff reductions, export quotas, and alignment of rules of origin.
Benefits for Both Sides:
For India: Affordable access to premium EVs, technology transfer, and potential for local job creation through UK investment.
For the UK: Entry into one of the fastest-growing auto markets and opportunities in India’s expanding EV value chain.
However, challenges remain.
India’s high tariffs protect domestic manufacturing, while UK firms must navigate homologation standards and global competition — particularly from China.
| Aspect | UK → India | India → UK | FTA Focus/Challenges |
| Opportunity | Exports of luxury/premium vehicles, components, EV tech partnerships. | Exports of affordable EVs, investments in UK auto sector. | Tariff liberalization, EV quotas, rules of origin. |
| Current barriers | High Indian tariffs (110%+), regulatory complexity. | UK’s 10% tariff, strict homologation standards. | Balancing tariff cuts with protection of local industries. |
Beverages: Raising a Glass to UK–India FTA Opportunities
Few products carry heritage and prestige like Scotch whisky — and it’s set to take center stage in the UK–India FTA.
For the UK, Scotch whisky isn’t just a cultural icon — it’s a major industry supporting around 11,000 jobs and billions in exports. Brands like Diageo and Chivas have long viewed India as a dream market. But India’s stiff tariffs — with an effective 150% tax above the minimum import price (MIP) — have kept Scotch a niche luxury product for the wealthiest consumers.
Yet India’s story is changing fast. In 2024, India became the largest market for Scotch whisky by volume, importing over 192 million bottles — a 13.8% increase from 2023. Rising incomes and evolving consumer tastes are fueling a premiumization wave.
Enter the FTA.
UK producers are pushing for phased tariff reductions — from the current 150% to 100%, and eventually 50% over the next decade. Discussions also cover protecting geographic indications (GI) like “Scotch Whisky” and lowering the MIP to make imports more affordable.
If successful, the FTA could unlock a surge in UK whisky exports to India. Meanwhile, Indian bottlers, distributors, and hospitality businesses would gain opportunities for partnerships — from contract bottling to whisky tourism.
But challenges loom.
Indian liquor producers, who dominate the domestic IMFL market, are wary of losing ground. States also depend heavily on alcohol excise for revenue, making duty reductions politically sensitive. Health advocates are closely watching the liberalization of alcohol trade, adding another layer of complexity.
As for Indian exports?
India’s spirits exports to the UK are minimal — tea, coffee, and spices remain its key strengths in beverages.
| Aspect | UK → India | India → UK | FTA Focus/Challenges |
| Opportunity | Reduced tariffs on Scotch; bottling partnerships, whisky tourism. | Minimal (spirits exports from India are negligible). | Phased tariff cuts from 150% to ~100%, possibly 50%; GI protections; managing fiscal/social sensitivities. |
| Current barriers | 150% import duty, GI labeling issues, strong domestic producer lobby. | – | Balancing revenue loss fears and industry protection. |
Pharmaceuticals & Medical Technology: Healing New Paths through the UK–India FTA
The UK–India Free Trade Agreement (FTA) could be a prescription for growth in the pharmaceutical and medical technology sectors. Both countries are eager to capitalize on each other’s strengths — the UK’s cutting-edge research and India’s manufacturing prowess — to boost healthcare access, affordability, and innovation.
For the UK, India offers vast potential. India’s pharmaceutical market is projected to reach $130 billion by 2030, fueled by rising incomes and expanded healthcare coverage. British firms — known for specialty drugs, vaccines, and medical devices — are eyeing India’s hospitals, diagnostics labs, and fast-expanding private healthcare sector.
From India’s side, the story is equally compelling. Indian pharma giants like Sun Pharma, Cipla, and Dr. Reddy’s already have a strong global footprint. An FTA could give them smoother access to the UK market, especially post-Brexit, when the UK has had to rework its drug approval and regulatory systems separate from the EU.
Indian med-tech startups, offering low-cost innovations like portable diagnostics and affordable implants, are also looking for new markets — and the NHS’s appetite for cost-effective solutions could open doors.
Key FTA Provisions Being Negotiated:
- Faster regulatory approvals and mutual recognition agreements (MRAs) for medicines and devices.
- Reduced tariffs on medical devices and pharma inputs.
- Streamlined IP protections balanced with access to affordable generics.
Benefits for Both Sides:
- For India: Increased access to the UK market; investment in clinical research collaborations; tech transfer.
- For the UK: Expanded pharmaceutical exports; partnerships with India’s vibrant generic and biotech sectors.
However, challenges are real.
- India’s focus on affordable generics may clash with UK demands for stronger IP protections.
- Regulatory harmonization must avoid raising costs or delaying access to medicines.
| Aspect | UK → India | India → UK | FTA Focus/Challenges |
| Opportunity | Export of specialty drugs, vaccines, med-tech devices; R&D partnerships. | Export of generics, biosimilars, affordable med-tech to the UK; clinical trial services. | IP protection, regulatory cooperation, balancing innovation with affordability. |
| Current barriers | Complex Indian pricing and regulatory controls. | Post-Brexit approval processes; generic competition concerns. | IP standards, mutual recognition of certifications. |
IT & Digital Services: Building the Digital Bridge in the UK–India FTA
The digital economy is one of the brightest stars in the UK–India FTA constellation. As two of the world’s leading tech hubs, the UK and India see a digital corridor as essential for future growth.
UK firms — spanning fintech, cybersecurity, AI, and digital health — are eager to tap into India’s booming market of over 850 million internet users. UK-based startups and tech giants alike are investing in India’s fast-growing need for digital infrastructure, financial inclusion, and e-governance solutions.
India, in turn, is a powerhouse in IT services and emerging technologies. From Infosys and TCS to dozens of agile startups, Indian firms dominate global outsourcing and are now moving up the value chain into AI, SaaS, and cyber defense — making the UK’s tech market a priority.
Key FTA Provisions Being Negotiated:
- Easing cross-border data flows while respecting privacy concerns.
- Removal of market entry barriers for digital service providers.
- Greater visa flexibility for tech professionals (a sticky but critical point).
Benefits for Both Sides:
- For India: Greater market access for tech services; easier movement of skilled workers; partnerships in innovation.
- For the UK: Access to India’s deep tech talent pool; expansion of fintech, AI, and cybersecurity collaborations.
Challenges:
- Data localization demands from India may collide with UK’s open-data policies.
- Intellectual property protection in the digital domain remains complex.
| Aspect | UK → India | India → UK | FTA Focus/Challenges |
| Opportunity | Export of fintech, AI, cybersecurity, e-health solutions. | Export of IT/BPM services, SaaS, AI startups into the UK. | Cross-border data flows, digital trade rules, visa facilitation. |
| Current barriers | Indian data localization norms; regulatory approvals. | UK’s tighter visa norms; procurement preferences. | Digital standards alignment; professional mobility. |
Chemicals & Advanced Materials: A New Formula for UK–India Trade
In the evolving UK–India FTA, chemicals and advanced materials form a critical bond, combining the UK’s specialty innovation with India’s scale and industrial demands.
British firms — leaders in bio-composites, eco-friendly solvents, and antimicrobial technologies — see India’s vast manufacturing sectors (textiles, agriculture, pharmaceuticals) as major customers. Case in point: UK-based Microfresh already supplies antimicrobial coatings to Indian textile and leather mills.
For India, bulk chemicals remain a strength. Indian companies — producing dyes, fertilizers, and petrochemical intermediates — could expand their exports to the UK, while also partnering in green-tech projects like battery materials and carbon fiber composites.
Key FTA Provisions Being Negotiated:
- Tariff cuts on chemicals and intermediates.
- Managing the Carbon Border Adjustment Mechanism (CBAM) — the UK’s planned carbon tariffs on high-emissions imports — with exemptions or phased adaptation for India.
Benefits for Both Sides:
- For India: Access to next-generation materials and green chemical technologies.
- For the UK: Expanded market for high-value specialty chemicals; cheaper imports of bulk inputs.
Challenges:
- Environmental standards, especially under CBAM, could raise compliance costs for Indian firms.
- Complex rules of origin could entangle supply chains.
| Aspect | UK → India | India → UK | FTA Focus/Challenges |
| Opportunity | Specialty chemicals (antimicrobials, composites, eco-solvents); green R&D. | Bulk chemicals (dyes, fertilizers, intermediates); green-tech investments. | Tariff cuts, CBAM exemptions, environmental standards alignment. |
| Current barriers | Indian regulatory approvals; shipping costs. | UK environmental import standards (REACH). | Carbon tariffs, complex rules of origin. |
Textiles & Apparel: Weaving Stronger UK–India Threads
The textiles and apparel sector both are poised to stitch a success story in the UK–India FTA.
For India, the stakes are high. With the UK heavily reliant on Chinese clothing imports, a shift toward Indian garments — rich in quality fabrics, artisan designs, and competitive prices — is a golden opportunity. Brands like Arvind and Reliance are ready to scale exports, especially if the current 12% tariffs are eliminated.
The UK, on its part, brings high-end fabrics, woolens, and technical textiles to the table. UK designers are keen to tap into India’s rising middle class and growing luxury market.
Key FTA Provisions Being Negotiated:
- Full liberalization of textile and apparel tariffs.
- Tightened rules of origin to prevent third-country transshipment.
- Incorporation of ethical and sustainability standards.
Benefits for Both Sides:
- For India: Boosted textile exports, investments in design hubs and sustainable cotton.
- For the UK: Diversified apparel sourcing; expanded technical textile markets.
Challenges:
- Indian manufacturers must meet stringent UK quality, safety, and labor standards.
- Competition from Bangladesh, Vietnam remains stiff.
| Aspect | UK → India | India → UK | FTA Focus/Challenges |
| Opportunity | High-end fabrics, technical textiles; joint design centers. | Export of garments, technical textiles; UK retail investments. | Tariff elimination; rules of origin enforcement; sustainability norms. |
| Current barriers | UK compliance costs; higher labor input. | Stringent UK standards; competition from low-cost exporters. | Ethical sourcing, environmental compliance. |
When Trade Gets Personal: The Human Side of the FTA
One issue still on the table as the UK–India FTA nears completion is National Insurance Contributions (NICs) by Indian professionals working in the UK. These short-term workers often pay into the UK’s system without staying long enough to qualify for benefits like the state pension. India is pushing for a Social Security Agreement to exempt them for up to two years—allowing continued contributions to India’s own pension scheme instead. While the UK weighs this against rising NIC rates and public service access concerns, the debate highlights how the FTA isn’t just about sectors and supply chains—it also shapes how people move, work, and are treated across borders
Unlock the Potential of the UK–India FTA with Tailored Strategic Insights
With negotiators reporting that roughly 90% of the UK–India FTA is already agreed, momentum is strong, and optimism is high for businesses on both sides. Government analysis highlights how the two economies complement each other: the UK’s strengths in transport equipment, pharmaceuticals and financial services align with India’s expertise in textiles, agriculture and telecommunications/IT services. Closer integration of supply chains – for example in automotive and textiles – could yield additional gains. Coupled with India’s booming economy forecast to lift UK exports by £9.2bn (₹96,600 crore) by 2035, these factors give companies every reason to be encouraged. What’s Next? A Deep Dive into Market Readiness
In our upcoming article, we’ll take a closer look at how prepared the UK and India are to support this new era of trade and investment. From regulatory frameworks and incentive schemes to cutting-edge digital and physical infrastructure, we’ll analyze how both nations are aligning policies and investments to drive mutual prosperity. Expect practical insights into how these ecosystems can help your business turn optimism into tangible growth.
Ready to seize the opportunities of the UK–India FTA? Let us guide you with strategic perspectives tailored to your sector and ambitions. With the FTA making UK Scotch more accessible, we can cheers to that—along with unlocking potential in countless other sectors. Contact us today to start transforming policy shifts into your competitive advantage.