The India-UK free trade pact is a game-changer for trade relations

It will boost bilateral trade but could also serve as a template for future agreements that India is negotiating with others

- CHANDRAJIT BANERJEE

The finalization of the Free Trade Agreement (FTA) between India and the United Kingdom marks a historic step towards strengthening bilateral trade and investment relations. Businesses on both sides have welcomed the conclusion of trade talks that began in 2022 and were fast-tracked by successive UK governments.

The agreement promises to enhance economic engagement and reshape global value chains. Indian industry contributes extensively to the UK's economy. According to the Confederation of Indian Industry's (CII) India meets Britain Tracker 2024 report, the number of Indian companies in the UK was estimated at more than 970, contributing about £1.17 billion to the UK's corporation tax collections. These organizations were found to employ around 1.1 million people, supporting local economies and livelihoods.

The agreement is poised to build on this strong foundation, offering businesses fresh momentum in both countries to strengthen partnerships, scale up operations and drive mutual growth.

Geopolitical context: The agreement comes amid global trade uncertainty. With many developed countries around the world looking to diversify their trade and investment partnerships, there is a growing search for reliable and resilient partners. India is positioning itself as a reliable partner through domestic reforms and efforts to emerge as a global manufacturing hub for exports. The trade agreement further signals India's commitment to stability in trade policy. Also, India is negotiating agreements with other developed markets such as the US and EU that are expected to be equally comprehensive. This agreement may serve as a template.