by Kamrul Hasan FCILT – Sales manager UK & Ireland
The United Kingdom and India signed a landmark Free Trade Agreement (FTA) on 04 July 2025, marking a major milestone in the bilateral partnership between the two countries. The agreement, signed by UK Trade Secretary Jonathan Reynolds and Indian Commerce Minister Piyush Goyal, is expected to enter into force in early 2026 following completion of parliamentary scrutiny and ratification in both nations. UK Prime Minister Keir Starmer and India’s Prime Minister Narendra Modi attended the signing ceremony, underscoring the political importance and strategic ambition of the deal. Once implemented, the FTA is projected to increase annual UK–India trade by £25.5 billion in the long run, adding £4.8 billion to the UK economy and £5.1 billion to India’s economy each year. The agreement remains subject to the domestic procedures of the UK and Indian parliaments. Ratification is underway, with both governments committed to ensuring a smooth and timely entry into force.
We, DKT Allseas Shipping Ltd., the official UK liner agent for Indian national shipping line “The Shipping Corporation of India (SCI)” and proudly serving SCI since 2014, are greatly excited and looking forward to the commencement of the UK–India Free Trade Agreement (FTA). With our weekly services to and from two major UK ports—supporting business with all major Indian ports through an extensive network of road, rail, and feeder connections—we are fully prepared to handle increased container volumes in 2026 and beyond. Our experience, infrastructure, and commitment position us strongly to support the growing trade between the UK and India.
Major updates
Tariff reductions
There is significant liberalisation. For example, India will reduce or eliminate tariffs on ~90% of UK tariff lines (by count), covering ~92% by trade-value. Some sensitive products are excluded: e.g., sugar, milled rice, pork, chicken, eggs.
• For UK exports to India: Tariffs on 90% of UK goods will be cut or eliminated. Tariffs on Scotch whisky will be halved from 150% to 75% immediately and further reduced to 40% over ten years. Tariffs on UK-made cars (under a quota) will drop from over 100% to 10%.
• For Indian exports to the UK: 99% of Indian goods exports will gain duty-free access, including textiles, leather goods, and jewellery, which currently face tariffs of 4–16%.
Services and Mobility
Services, digital trade, IP, regulatory cooperation also included Indian Government.
• The agreement includes provisions for easier temporary business travel for professionals in sectors like IT, engineering, and architecture.
• “Double Contribution Convention” (DCC) element: for example, Indian workers in the UK could be exempt from UK National Insurance contributions for a period (and vice versa).
Public procurement
The deal grants UK firms access to India’s federal procurement market.
• UK businesses will gain access to bid for a wide range of Indian government contracts worth at least £38 billion annually, a first in an Indian trade deal.
• This landmark provision of the UK–India Free Trade Agreement opens significant new commercial opportunities for British firms across sectors such as infrastructure, transport, energy, and public services. By enabling fair and transparent access to one of the world’s largest public procurement markets, the deal is expected to enhance competition, support export growth, and strengthen the economic partnership between the two countries.
Current Inactivity
The deal is not yet legally in effect; both countries need to complete their domestic ratification procedures.
• In the UK: They are following a process under the Constitutional Reform and Governance Act 2010 (CRaG).
• The government has already commissioned independent advice (e.g., from the Trade & Agriculture Commission, the Food Standards Agency, etc.) to inform its ratification. Once reports are submitted, Parliament will scrutinise the pact and legislation will follow.
• In India: The ratification seems simpler: according to media reports, approval will come via the cabinet.
• According to commentary (e.g. from Cooper Parry), the implementation is expected later in 2025 or early 2026, depending on how quickly the ratification goes.
Risks & Challenges – Ratification & Political
Parliamentary approval delays even though the deal is signed, it must survive political scrutiny in both countries. In the UK, there may be debates, amendments, delays or opposition could push back entry into force. In India, cabinet approval is required, and while expected, political priorities or sudden elections could slow implementation.
Tariff & Market Access
Phased tariff reductions and not all tariff reductions are immediate. Some tariff reductions will be gradual, not immediate, potentially affecting trade flows in the short term. Products like sugar, milled rice, pork, chicken, and eggs are excluded or have limited liberalisation, meaning not all sectors benefit equally. Non-tariff barriers such as standards, regulations, and customs procedures could still restrict trade even if tariffs are cut.
Economic & Sectoral
Uneven benefits for MSMEs may benefit from simplified access, but larger sectors (steel, automotive) may face intense competition. The currency & trade balance volatility: fluctuating exchange rates could affect cost competitiveness. Sectoral adjustment costs: industries in sensitive sectors may face domestic pressure to protect local jobs, creating potential backlash.
Strategic & Geopolitical
Geopolitical shifts with changing global alliances, WTO disputes, or regional trade pacts could influence implementation. Dependency risk: overreliance on either market for critical imports or exports could pose supply chain vulnerabilities.
Regulatory & Implementation
Rules of origin complexity: exporters must comply with detailed origin rules to qualify for preferential tariffs; errors could lead to denied benefits. Customs & digital infrastructure: efficient implementation depends on customs systems, digital trade platforms, and regulatory alignment. Delays or misalignment could slow cross-border trade. Standards & certifications: divergent product standards, particularly in food, agriculture, and pharmaceuticals, may limit immediate benefits.
Social Security / Mobility
Labour mobility limits: the DCC (social security exemptions) is limited; broader migration provisions are not included, so skilled labour movement may be restricted. Social perception: domestic groups may oppose the deal if they perceive unfair competition or job risks.
In conclusion, while the FTA represents a historic opportunity for economic growth, the real benefits will depend on careful implementation, regulatory alignment, and strategic management of sensitive sectors and domestic concerns. Businesses and policymakers must prepare proactively to ensure smooth adoption and to maximize the deal’s advantages once it enters into force, likely in early 2026.
For updates on FTA 2026 and our regular service, please connect with us on LinkedIn @ DKT Allseas Shipping Ltd or contact DKTA team to find out more about how we can help.
