The recently signed India–UK Free Trade Agreement (FTA) marks a transformative moment in bilateral relations, particularly for the manufacturing and engineering sectors. Projected to boost annual bilateral trade by GBP 25.5 billion (USD 34 billion) by 2040, this FTA is the UK’s most comprehensive post-Brexit deal. It aims to double or even triple current trade volumes within the next decade, creating vast opportunities for industrial collaboration.
Opportunities Across Sectors
Automotive Sector:
Indian tariffs on British cars—currently exceeding 100%—will be reduced to 10% over the next 10 years. This drastic cut benefits UK car manufacturers seeking access to the growing Indian market and simultaneously offers Indian auto component suppliers expanded opportunities to serve UK automotive firms, especially in areas such as engine castings, electronics, and steering systems.
Aerospace and Advanced Engineering:
Tariff reductions on British aerospace components and high-tech machinery will drive greater cooperation in precision manufacturing. This is expected to stimulate joint ventures and technology transfers, aligning with India’s “Make in India” initiative and supporting the UK’s push to expand its engineering exports.
Textiles and Apparel:
Eliminating UK tariffs on Indian textiles and garments gives a major boost to India’s textile hubs, including Gujarat. With this edge, India can better compete against other low-cost producers like Bangladesh and Vietnam, who already enjoy favorable terms with Western markets.
Medical Devices and Cleantech:
The deal also addresses non-tariff barriers, facilitating British exports of medical devices to India, which currently imports about 80% of its medical equipment. Additionally, sectors such as electric vehicles and clean energy solutions are expected to attract fresh collaboration and investment.
Strategic and Economic Impact
Beyond trade, the agreement signals a long-term strategic partnership. India gains access to advanced technologies and stable export markets, while the UK secures a key partner in a fast-growing economy. A parallel social security accord allows temporary Indian workers in the UK to avoid dual contributions for three years, enabling smoother labor mobility across borders.
Crucially, Indian goods will now enjoy zero or significantly reduced tariffs when entering the UK market—an advantage not extended to Chinese products. With the UK imposing standard import duties on Chinese goods and facing ongoing geopolitical tensions, many British firms are reassessing their supply chains. The absence of a UK-China FTA—something the UK government has confirmed it has “no plans” to negotiate—further reinforces India’s position as a reliable, cost-effective alternative.
Market Shift in Favor of India
As non-tariff barriers are eased and customs procedures simplified, Indian exporters will benefit from faster clearances and lower costs, making their goods more price-competitive in the UK. In categories like engineering components, light machinery, auto parts, and apparel, Indian products may even undercut Chinese alternatives.
Although China will remain a dominant force in global manufacturing, the strategic and tariff-driven advantages offered by the India–UK FTA are already tilting the playing field. UK companies—especially those sensitive to compliance, political risk, and total landed costs—are increasingly likely to prefer Indian sourcing.