From Engineering to Gems: How India's UK Trade Deal Could Boost Exports

The India-UK Free Trade Agreement (FTA) comes into effect on July 15, nearly a year after it was signed, marking one of India's most significant bilateral trade pacts in recent years.

The Ministry of Commerce has completed all domestic procedures required for implementation and will mark the rollout with symbolic flag-off ceremonies for export consignments across the country.

The agreement is expected to significantly deepen economic ties between the two nations, with the government targeting $100 billion in bilateral trade by 2030.

Commerce Secretary Rajesh Agrawal described the pact as a "gold standard" FTA, citing its broad sectoral coverage and deep reductions in both tariff and non-tariff barriers. Additional Secretary Darpan Jain said the agreement would create new opportunities for exporters, manufacturers, service providers and MSMEs.

Tariff Cuts Open New Export Opportunities

Under the agreement, Indian exports will enjoy duty-free access on nearly 99% of tariff lines, covering almost the entire value of bilateral trade. In return, India will reduce or eliminate tariffs on 90% of UK tariff lines, with 85% becoming fully duty-free over the next 10 years.

The agreement comes at a time when bilateral trade continues to expand. Merchandise trade between the two countries reached $25.1 billion in FY26, with India posting a trade surplus of $1.76 billion.

Services trade is even larger, touching nearly $35.5 billion in 2024, with India recording a surplus of about $7.9 billion.

Engineering, Textiles Lead Manufacturing Gains

Engineering goods are expected to be among the biggest beneficiaries. Despite the UK importing engineering products worth nearly $194 billion annually, India's exports to the market remain relatively modest.

Immediate duty-free access for machinery, auto components, industrial equipment, aluminium products and passenger vehicles is expected to improve India's competitiveness against suppliers such as China, Germany and the US.

The textile and apparel sector also stands to benefit, with 100% duty-free access across 1,143 tariff lines.

The removal of UK tariffs of up to 12% is expected to support exports of garments, home textiles and cotton products while boosting manufacturing hubs such as Tiruppur, Surat, Ludhiana, Panipat and Bhadohi.

Marine, Agriculture and Processed Food to Benefit

The FTA grants complete duty-free access for Indian marine exports, removing tariffs of up to 20% on products such as frozen shrimp, fish, squid and processed seafood.

The move is expected to strengthen exports from coastal states including Andhra Pradesh, Kerala, Gujarat, Tamil Nadu, Odisha and West Bengal.

Agriculture and processed food exporters are also set to gain. Most farm products will receive zero-duty access from day one, while 97.3% of processed food tariff lines will enjoy preferential treatment.

However, sensitive products such as dairy, rice, sugar, eggs and certain cereals remain outside the agreement.

Gems, Leather and Chemicals Get a Boost

The agreement also removes tariffs on a wide range of gems and jewellery products, including polished gemstones, lab-grown diamonds and silver jewellery, strengthening India's position in the UK's $4-billion jewellery market.

Leather and footwear exporters will receive 100% duty-free access, eliminating tariffs of up to 16% and improving competitiveness against suppliers such as China and Vietnam.

Similarly, chemical exporters will benefit from the removal of duties of up to 8% on products ranging from organic and inorganic chemicals to speciality chemicals.

The government expects the agreement to drive exports, encourage manufacturing investment, strengthen MSME participation and create employment across major industrial clusters, reinforcing India's position in one of its fastest-growing strategic trade partnerships.