UK-India Free Trade Agreement 2025: Where Negotiations Stand and What's at Stake

Why the UK-India FTA Matters#

India is the world's fifth-largest economy by nominal GDP and the fastest-growing major economy, expanding at 6-7% per year in recent years. The UK-India bilateral trade relationship was worth approximately £36bn in 2023 — significant but well below its potential given the size of both economies. India currently applies tariffs of 150% on Scotch whisky, 100-125% on UK cars, and high tariffs on a range of UK manufactured goods. A comprehensive FTA could reduce or eliminate these tariffs, opening one of the world's most dynamic consumer markets to UK exporters. For UK importers, India offers competitive manufacturing in textiles, pharmaceuticals, engineering goods, and IT services — and lower tariffs on Indian exports to the UK would reduce costs in those categories.

The Sticking Points: What India Wants#

India's primary negotiating asks centre on two areas. First, visa and mobility: India wants easier routes for Indian professionals to work in the UK — IT workers, students, and skilled migrants — and greater recognition of Indian professional qualifications. The UK's post-Brexit immigration policy has been focused on controlling numbers from all sources, making significant concessions on Indian mobility politically sensitive. Second, India wants to protect its domestic manufacturing sector: reducing UK tariffs on Indian textiles, apparel, chemicals, and food products while maintaining India's own tariffs on sensitive domestic industries. The asymmetry — India has much higher tariffs than the UK to start with — means India has more tariff-cutting to do, which makes domestic politics in India complicated.

What the UK Wants: Whisky, Cars, and Financial Services#

The UK's priority asks are well-documented. On goods: a reduction in India's 150% whisky tariff (Scotch whisky exports to India were worth £215m in 2022 at current tariff levels and are projected to grow significantly with lower tariffs); reduction in car tariffs (from 100-125% to 10% or lower would open India's large and growing car market to UK manufacturers); and market access for British food and agricultural products. On services: UK financial services firms want regulatory recognition and market access to Indian financial markets; UK professional services firms want qualification recognition for lawyers, accountants, and engineers; and the UK digital sector wants data access and technology market access.

The Missed Deadlines: A Chronology#

Negotiations launched in January 2022 with an ambition to conclude by Diwali 2022 — a target set partly for its diplomatic symbolism. That deadline passed without a deal. A revised target of early 2023 was missed due to Indian election timing and UK political instability. The UK general election in 2024 brought a new government that signalled a desire to conclude the deal but also to prioritise the UK-EU relationship reset. As of 2025, negotiating rounds continue but no completion date has been set publicly. The complexity of the negotiations — covering goods, services, investment, intellectual property, and government procurement — and the political sensitivities on both sides make an imminent announcement uncertain.

What a Deal Would Mean for UK Importers#

For UK businesses importing from India, an FTA would reduce UK tariffs on Indian goods — currently averaging around 4-5% for most product categories under WTO MFN rates, but higher in specific categories. The more significant impact for importers may be on non-tariff barriers: improved customs cooperation, recognition of conformity assessment, and reduced documentation requirements would lower the administrative cost of UK-India trade. The pharmaceutical sector is a particular focus — India supplies a large proportion of generic medicines to the UK, and streamlined regulatory recognition could reduce costs and speed market access. Textile importers would benefit from tariff reductions on Indian fabrics and garments.

Planning Around Uncertainty: What Businesses Should Do Now#

Given the uncertainty over timing, UK businesses with India supply chains should not build their operating models around FTA benefits that have not yet been agreed. The prudent approach is to understand current tariff costs under the WTO MFN framework, identify which of your product categories would benefit most from an FTA, and build a business case for India sourcing that works at current tariff rates. If and when a deal is concluded, you will be positioned to capture the benefit quickly. AskBiz tracks UK trade agreement progress and will flag when changes to India tariff rates come into effect, letting you update your landed cost calculations automatically.

• UK-India FTA negotiations have been running since January 2022 and remain unresolved despite multiple missed deadlines.
• The core sticking points are tariffs on Scotch whisky and UK cars (which India wants to keep high), and visa and professional recognition access (which India wants the UK to expand).
• A deal would be the UK's most significant post-Brexit trade agreement, covering a $3.7trn economy growing at 6-7% per year.