THE POSITIVES AND NEGATIVES OF THE INDIA-UK FREE TRADE AGREEMENT

In May 2025, India and the United Kingdom signed a landmark Free Trade Agreement (FTA) — a deal that’s been years in the making and is expected to reshape how the two nations conduct business.

- AKAASH BHADRA

While headlines have focused on tariff reductions and trade volume goals, a key industry silently revving its engines in the backdrop is the Indian automotive sector. The impact? Significant. From the boardrooms of Tata Motors to the factory floors of component suppliers in Pune and Chennai, the deal is sending ripples — and opportunities — throughout the industry.

But before we get into what this means for carmakers and everyday Indian consumers, let’s look at why this deal came to be in the first place.

A Post-Brexit Reality and the Need for New Alliances

Since the UK’s departure from the European Union, it has been actively pursuing bilateral agreements to plug the gap left by lost EU privileges. For the UK, India is a no-brainer — it’s one of the fastest-growing economies, with a rising middle class, an expanding consumer base, and a hunger for infrastructure and mobility.

India, on the other hand, sees in the UK an opportunity for investment, tech transfer, and greater market access for its homegrown industries. This FTA comes on the heels of several rounds of negotiations aimed at slashing tariffs, improving trade flows, and simplifying access to each other’s markets. According to trade analysts, the goal is to double bilateral trade by 2030. And if there’s one industry that stands to benefit early and in a tangible way, it’s auto.

The Indian Auto Industry: Gearing Up for Opportunity

For decades, the Indian automotive market has been largely domestic focused, though its global presence — through component exports and a few global car brands owned by Indian firms — has grown steadily. Now, this deal gives it a significant leg up.