Textiles to Pharma: How India’s Sectors Will Gain from UK FTA
With tariffs on 99% of Indian goods entering the UK market set to be reduced to zero, the agreement is expected to create substantial advantages for key labour-intensive sectors.
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In a landmark move on May 6, 2025, India and the United Kingdom signed a Free Trade Agreement ( FTA ) after 15 rounds of negotiations over the last three years. The deal brings together the world's fifth and sixth-largest economies in a partnership to reshape bilateral trade. With tariffs on 99% of Indian goods entering the UK market set to be reduced to zero, the agreement is expected to create substantial advantages for key labour-intensive sectors. By enhancing price competitiveness and market access in one of the world’s most mature consumer economies, the FTA positions India to expand its share in the UK market and improve its global export rankings. This report examines how the FTA could accelerate growth across these sectors, strengthen India’s position in international trade, and deliver long-term economic benefits.
UK-India trade is gaining strong momentum, with total trade in goods and services reaching £42.6 billion in the four quarters ending Q4 2024, an impressive 8.3% jump from the previous year. This surge reflects a growing economic partnership, driven by rising demand, deeper collaboration, and the promise of even greater integration. UK exports to India rose by £945 million (5.8%), while imports from India soared by £2.3 billion (10.1%), highlighting India’s growing role as a major supplier to the UK market.
Now, India expects the bilateral trade to double from $60 billion (both merchandise and services) currently to $120 billion by 2030, thanks to this FTA. This deal ranks among the UK's most significant post-Brexit moves and for India, it is its third largest, after deals with Australia and Japan. For India, it adds to a steadily expanding trade network, which already includes 14 FTAs and 6 PTAs aimed at boosting exports. Therefore, to maintain surplus trade with the UK, India must ensure its exports remain competitive as highlighted by the government saying “substantially improve the competitiveness of Indian goods in the UK compared to other countries”.
According to the trade agreement, 90% of UK tariff lines (or product categories) will face reduced tariffs in India, which will lead to lower prices for UK products in India, including whisky, gin, automotive items, medical devices, cosmetics, aerospace components, lamb, salmon, electrical machinery, soft drinks, chocolate, and biscuits.
The pact also specifies that 99% of Indian tariff lines, covering nearly 100% of trade value, will now enjoy zero duty, opening huge export opportunities for India in sectors such as textiles, marine products, leather, footwear, sports goods, toys, gems & jewellery, engineering goods, auto parts, engines, and organic chemicals.
Additionally, Indian workers temporarily posted in the UK and their employers will now be exempt from paying UK social security contributions for up to three years. This will reduce costs for Indian service providers, boost their competitiveness, and create more job opportunities for Indians in the UK.
The past decade has seen a consistent and robust increase in the UK’s imports from India, reflecting a deepening economic engagement. In 2015, UK imports from India stood at £9.3 billion. Fast forward to 2024, and this figure has surged to £25.5 billion—representing a 174% increase over ten years and an 11.2% compound annual growth rate. Even in the face of global disruptions such as Brexit and the COVID-19 pandemic, the trade trajectory remained strong. Particularly notable are the jumps from £14.8 billion in 2019 to £18.0 billion in 2021, and then a sharp climb to £25.5 billion in 2024—demonstrating a clear post-pandemic recovery and increasing reliance on Indian goods.
This upward trend is driven by India’s growing competitiveness in labour-intensive sectors such as textiles, leather, and pharmaceuticals, coupled with increasing demand for high-quality, cost-effective products in the UK. With this FTA expected to eliminate tariffs on 99% of Indian goods entering the UK, this trend is poised to accelerate, potentially positioning India as one of the top three non-EU exporters to the UK in the coming years.
Moreover, India ranked as the UK’s 11th largest trading partner in the four quarters of 2024, contributing 2.4% to the UK’s total trade. During this period, the top five categories of imported goods from India by the UK were refined oil, clothing, telecom & sound equipment, medicinal & pharmaceutical products, and iron & steel.
Textiles
Indian textile and apparel export to the UK amounts to £877.3 million (₹99,727 crore), and until recently, this faced import duties of 8–12% imposed by the UK. The removal of these tariffs under the new trade agreement eliminates a long-standing obstacle, leveling the playing field for Indian exporters alongside competitors from Bangladesh, Turkey, Pakistan, Cambodia, and Vietnam, who already benefit from duty-free access to the UK. As the world’s 6th largest exporter of textiles and apparel in 2023, India stands to improve its global ranking through this FTA. This move will boost the competitiveness of Indian exporters in a major international market and support sustained industry growth.
It is important to highlight that India currently exports nearly $1.2 billion worth of ready-made garments to the UK, representing 6% of its total garment exports. Post-deal, this share is expected to double to 12%. Notably, MSMEs make up 80% of India’s textile sector, as reported by CareEdge.
Apart from this, the central government has reported that there has been almost 6% growth in the textiles sector due to the FTAs and Preferential Trade Agreements PTAs.
Chemicals
This FTA also marks a significant breakthrough for India’s export of chemicals, especially organic chemicals, which are now exempted from UK tariffs that previously ranged from 0–8%. As a result, India’s organic chemical exports to the UK are projected to surge by 130%—from $420 million in 2024 to $966 million by 2027—driven by enhanced price competitiveness and supply chain opportunities. Industry leaders like UPL and Tata Chemicals are poised to benefit, with their export growth estimated between 8–10% due to improved market access.
The broader chemical sector, which is a major foreign exchange earner for India and dominated by MSMEs (over 60%), is another clear beneficiary of the FTA. Although the UK is currently India’s 13th largest destination for chemical export, this agreement positions it for a stronger role, particularly as Indian export to the UK grew 25.55% year-on-year in FY25, reaching $570.32 million. According to Chemexcil, the UK currently accounts for only 1.9% of India’s total chemical export, indicating significant room for growth. Additionally, the ripple effect of lower tariffs is expected to benefit related sectors like pharmaceuticals and engineering goods, which rely on chemical inputs, further reinforcing India's role as a competitive, reliable supplier in global value chains.
Gems and Jewellery
Another sector which will gain a boost is India's gems and jewellery export through the UK-India FTA—especially crucial as exports to traditional markets like the US and China decline. The agreement eliminates UK tariffs on Indian gems and jewellery, offering a significant price advantage and unlocking a lucrative, premium market. According to the Gem & Jewellery Export Promotion Council (GJEPC), Indian exports to the UK are projected to more than double, reaching ₹21,183 crore (US$ 2.5 billion) within the next two years. In 2024, exports stood at ₹7,973 crore (US$ 941 million), while imports from the UK totaled ₹22,877 crore (US$ 2.7 billion)—indicating substantial trade potential. The FTA is expected to double bilateral trade in this sector to ₹59,311 crore (US$ 7 billion), fueling growth, investment, and innovation.
Industry leaders, including GJEPC Chairman Kirit Bhansali, have emphasized the UK’s role as a pivotal partner for Indian jewellery exports, citing the agreement as a means to foster deeper artisan collaboration and innovation. The UK currently imports jewellery worth ₹25,419 crore annually from global markets, and Indian exporters are now positioned to capture a larger share of this demand. Experts believe the FTA will not only boost commercial outcomes but also elevate Indian craftsmanship on the global stage—celebrating a shared cultural legacy while creating new investment and employment avenues across India’s MSME-driven jewellery hubs.
Marine Products
India’s marine products sector, particularly reliant on export of shrimp and other seafood, stands will also gain substantially from the India-UK FTA. Historically a stronghold for Indian seafood exports, the UK market has seen shrinking trade volumes in recent years. From a peak of $180.57 million in FY2017-18, marine product exports to the UK declined steadily, bottoming out at $104.10 million in FY2024-25, due to increasing competition from other countries and market access issues. The FTA now provides a strategic opportunity to reverse this downward trend, especially in the backdrop of uncertainty in the US, traditionally India’s largest seafood market, which is embroiled in reciprocal tariff disputes.
By eliminating tariffs on key Indian seafood exports, including frozen king prawns, the agreement enhances price competitiveness and retail visibility in the UK.
These are just a few sectors that will witness significant export growth due to this FTA by eliminating tariffs, reducing non-tariff barriers, and enhancing market access for domestic producers. It helps Indian exporters diversify their markets, reducing dependence on traditional buyers and insulating them from geopolitical or trade-related uncertainties. Ultimately, the India-UK FTA is poised to unlock new growth avenues, strengthen bilateral economic ties, and accelerate India’s emergence as a leading global exporter by enhancing its integration with one of the world’s largest consumer markets.
Beyond boosting labour-intensive industries, the FTA is also set to strengthen trade in services such as IT/ITeS, financial services, professional and other business services, along with education, thereby generating additional employment and business opportunities.
India’s MSME sector, consisting of over 63 million enterprises and employing upwards of 250 million people, contributes more than 40% to the country’s total exports, according to a report by Economic Times. As trade between India and the UK is expected to double in the coming years, these small and medium-sized businesses across various industries stand to gain substantially from the enhanced market access and increased demand.
India-UK trade relations
UK-India trade is gaining strong momentum, with total trade in goods and services reaching £42.6 billion in the four quarters ending Q4 2024, an impressive 8.3% jump from the previous year. This surge reflects a growing economic partnership, driven by rising demand, deeper collaboration, and the promise of even greater integration. UK exports to India rose by £945 million (5.8%), while imports from India soared by £2.3 billion (10.1%), highlighting India’s growing role as a major supplier to the UK market.
Now, India expects the bilateral trade to double from $60 billion (both merchandise and services) currently to $120 billion by 2030, thanks to this FTA. This deal ranks among the UK's most significant post-Brexit moves and for India, it is its third largest, after deals with Australia and Japan. For India, it adds to a steadily expanding trade network, which already includes 14 FTAs and 6 PTAs aimed at boosting exports. Therefore, to maintain surplus trade with the UK, India must ensure its exports remain competitive as highlighted by the government saying “substantially improve the competitiveness of Indian goods in the UK compared to other countries”.
Key Aspects of India-UK FTA
According to the trade agreement, 90% of UK tariff lines (or product categories) will face reduced tariffs in India, which will lead to lower prices for UK products in India, including whisky, gin, automotive items, medical devices, cosmetics, aerospace components, lamb, salmon, electrical machinery, soft drinks, chocolate, and biscuits.
The pact also specifies that 99% of Indian tariff lines, covering nearly 100% of trade value, will now enjoy zero duty, opening huge export opportunities for India in sectors such as textiles, marine products, leather, footwear, sports goods, toys, gems & jewellery, engineering goods, auto parts, engines, and organic chemicals.
Additionally, Indian workers temporarily posted in the UK and their employers will now be exempt from paying UK social security contributions for up to three years. This will reduce costs for Indian service providers, boost their competitiveness, and create more job opportunities for Indians in the UK.
India’s Export Landscape to the UK
The past decade has seen a consistent and robust increase in the UK’s imports from India, reflecting a deepening economic engagement. In 2015, UK imports from India stood at £9.3 billion. Fast forward to 2024, and this figure has surged to £25.5 billion—representing a 174% increase over ten years and an 11.2% compound annual growth rate. Even in the face of global disruptions such as Brexit and the COVID-19 pandemic, the trade trajectory remained strong. Particularly notable are the jumps from £14.8 billion in 2019 to £18.0 billion in 2021, and then a sharp climb to £25.5 billion in 2024—demonstrating a clear post-pandemic recovery and increasing reliance on Indian goods.
This upward trend is driven by India’s growing competitiveness in labour-intensive sectors such as textiles, leather, and pharmaceuticals, coupled with increasing demand for high-quality, cost-effective products in the UK. With this FTA expected to eliminate tariffs on 99% of Indian goods entering the UK, this trend is poised to accelerate, potentially positioning India as one of the top three non-EU exporters to the UK in the coming years.
Moreover, India ranked as the UK’s 11th largest trading partner in the four quarters of 2024, contributing 2.4% to the UK’s total trade. During this period, the top five categories of imported goods from India by the UK were refined oil, clothing, telecom & sound equipment, medicinal & pharmaceutical products, and iron & steel.
Textiles
Indian textile and apparel export to the UK amounts to £877.3 million (₹99,727 crore), and until recently, this faced import duties of 8–12% imposed by the UK. The removal of these tariffs under the new trade agreement eliminates a long-standing obstacle, leveling the playing field for Indian exporters alongside competitors from Bangladesh, Turkey, Pakistan, Cambodia, and Vietnam, who already benefit from duty-free access to the UK. As the world’s 6th largest exporter of textiles and apparel in 2023, India stands to improve its global ranking through this FTA. This move will boost the competitiveness of Indian exporters in a major international market and support sustained industry growth.
It is important to highlight that India currently exports nearly $1.2 billion worth of ready-made garments to the UK, representing 6% of its total garment exports. Post-deal, this share is expected to double to 12%. Notably, MSMEs make up 80% of India’s textile sector, as reported by CareEdge.
Apart from this, the central government has reported that there has been almost 6% growth in the textiles sector due to the FTAs and Preferential Trade Agreements PTAs.
Chemicals
This FTA also marks a significant breakthrough for India’s export of chemicals, especially organic chemicals, which are now exempted from UK tariffs that previously ranged from 0–8%. As a result, India’s organic chemical exports to the UK are projected to surge by 130%—from $420 million in 2024 to $966 million by 2027—driven by enhanced price competitiveness and supply chain opportunities. Industry leaders like UPL and Tata Chemicals are poised to benefit, with their export growth estimated between 8–10% due to improved market access.
The broader chemical sector, which is a major foreign exchange earner for India and dominated by MSMEs (over 60%), is another clear beneficiary of the FTA. Although the UK is currently India’s 13th largest destination for chemical export, this agreement positions it for a stronger role, particularly as Indian export to the UK grew 25.55% year-on-year in FY25, reaching $570.32 million. According to Chemexcil, the UK currently accounts for only 1.9% of India’s total chemical export, indicating significant room for growth. Additionally, the ripple effect of lower tariffs is expected to benefit related sectors like pharmaceuticals and engineering goods, which rely on chemical inputs, further reinforcing India's role as a competitive, reliable supplier in global value chains.
Gems and Jewellery
Another sector which will gain a boost is India's gems and jewellery export through the UK-India FTA—especially crucial as exports to traditional markets like the US and China decline. The agreement eliminates UK tariffs on Indian gems and jewellery, offering a significant price advantage and unlocking a lucrative, premium market. According to the Gem & Jewellery Export Promotion Council (GJEPC), Indian exports to the UK are projected to more than double, reaching ₹21,183 crore (US$ 2.5 billion) within the next two years. In 2024, exports stood at ₹7,973 crore (US$ 941 million), while imports from the UK totaled ₹22,877 crore (US$ 2.7 billion)—indicating substantial trade potential. The FTA is expected to double bilateral trade in this sector to ₹59,311 crore (US$ 7 billion), fueling growth, investment, and innovation.
Industry leaders, including GJEPC Chairman Kirit Bhansali, have emphasized the UK’s role as a pivotal partner for Indian jewellery exports, citing the agreement as a means to foster deeper artisan collaboration and innovation. The UK currently imports jewellery worth ₹25,419 crore annually from global markets, and Indian exporters are now positioned to capture a larger share of this demand. Experts believe the FTA will not only boost commercial outcomes but also elevate Indian craftsmanship on the global stage—celebrating a shared cultural legacy while creating new investment and employment avenues across India’s MSME-driven jewellery hubs.
Marine Products
India’s marine products sector, particularly reliant on export of shrimp and other seafood, stands will also gain substantially from the India-UK FTA. Historically a stronghold for Indian seafood exports, the UK market has seen shrinking trade volumes in recent years. From a peak of $180.57 million in FY2017-18, marine product exports to the UK declined steadily, bottoming out at $104.10 million in FY2024-25, due to increasing competition from other countries and market access issues. The FTA now provides a strategic opportunity to reverse this downward trend, especially in the backdrop of uncertainty in the US, traditionally India’s largest seafood market, which is embroiled in reciprocal tariff disputes.
By eliminating tariffs on key Indian seafood exports, including frozen king prawns, the agreement enhances price competitiveness and retail visibility in the UK.
These are just a few sectors that will witness significant export growth due to this FTA by eliminating tariffs, reducing non-tariff barriers, and enhancing market access for domestic producers. It helps Indian exporters diversify their markets, reducing dependence on traditional buyers and insulating them from geopolitical or trade-related uncertainties. Ultimately, the India-UK FTA is poised to unlock new growth avenues, strengthen bilateral economic ties, and accelerate India’s emergence as a leading global exporter by enhancing its integration with one of the world’s largest consumer markets.
Beyond boosting labour-intensive industries, the FTA is also set to strengthen trade in services such as IT/ITeS, financial services, professional and other business services, along with education, thereby generating additional employment and business opportunities.
India’s MSME sector, consisting of over 63 million enterprises and employing upwards of 250 million people, contributes more than 40% to the country’s total exports, according to a report by Economic Times. As trade between India and the UK is expected to double in the coming years, these small and medium-sized businesses across various industries stand to gain substantially from the enhanced market access and increased demand.
