India-UK Free Trade Pact to Catalyse Export Growth and Economic Uplift: S&P Global Analysis

Mumbai, 3 July 2025: A newly finalised Free Trade Agreement (FTA) between India and the United Kingdom is projected to significantly accelerate India’s export momentum and stimulate domestic economic activity. According to a recent report by S&P Global Market Intelligence, the deal is poised to improve remittance flows, elevate consumption, and strengthen bilateral trade, paving the way for deeper commercial integration between the two economies.

Indian Workforce Abroad to Drive Higher Remittance Inflows

India’s robust global workforce remains a key contributor to its economic stability. In 2024, Indian workers remitted nearly USD 130 billion, accounting for 3.3% of India’s GDP. The UK stood as the third-largest remittance contributor, following the United States and the UAE. With the FTA easing mobility provisions, the remittance pipeline is expected to widen further.

National Insurance Relief to Boost Savings and Remittances

One of the most immediate benefits of the agreement is the exemption of Indian Information and Communication Technology (ICT) professionals from national insurance contributions for up to three years while working in the UK. This measure is set to enhance personal savings, a portion of which is anticipated to be remitted back home, strengthening India’s current account and consumer demand.

Indian Textile Sector Gains Market Diversification Advantage

Textile and apparel exports, a key component of India’s outbound trade, have recently faced headwinds in the US market due to rising competition and protectionist policies. The FTA offers an alternative by facilitating easier access to the UK market, helping manufacturers reduce dependence on a single geography while expanding their footprint in Western Europe.

UK Beverages to See Immediate Tariff Relief Under the FTA

The agreement delivers a rapid advantage to British exporters, particularly in the premium beverage segment. Approximately 97% of UK whisky and gin exports to India will benefit from halved tariffs, providing a competitive edge in one of the world’s fastest-growing spirits markets.

Bilateral Trade Target Set at USD 100 Billion by 2030

The FTA sets an ambitious goal of nearly doubling India-UK trade volumes—from USD 56.7 billion in 2024 to USD 100 billion by 2030. This target reflects both nations’ commitment to expanding commercial exchange across services, goods, and skilled labour migration.

Pharma and Auto Sectors See Partial Progress

Despite the comprehensive scope, the pact excludes Indian pharmaceutical exports, a key export category, and lacks detailed clarity on the UK’s car export quotas to India. Industry observers note that this signals ongoing negotiations and potential room for future amendments or side agreements.

A Strategic Win for Post-Brexit UK and India’s Global Trade Outlook

For the UK, which has been recalibrating its trade networks following Brexit, the FTA represents a swift and strategic alignment with a major emerging economy. Meanwhile, for India, the agreement is part of a broader push to expand its trade corridors—ongoing negotiations include countries in the Gulf, Southeast Asia, Japan, Australia, and Latin America, with multiple FTAs expected to be finalised through 2026.

Background: Why the Deal Matters Now

The deal arrives at a time of rising global protectionism, shifting supply chains, and the need for diversified market access. For India, the FTA strengthens its position as a resilient trade partner, while offering new opportunities for its exporters and skilled professionals. For the UK, it’s a critical milestone in rebuilding global trade alliances that align with its post-EU economic strategy.

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