UK-India Free Trade Agreement and Sri Lanka

Diligent observer or clueless bystander

- BY GOMI SENADHIRA

On 6th May 2025, India and the United Kingdom agreed on a Free Trade Agreement (the FTA) after nearly three years of negotiations.

The FTA is expected to take effect in January 2026. Announcing the agreement, the British government labelled it as the "biggest and most economically significant" trade agreement the UK has signed since leaving the European Union in 2020. If so, this is an extremely important development because the UK has already signed 39 trade agreements with about 73 countries, including very significant trade deals with Australia and Japan and one with the EU. The UK Prime Minister, Keir Starmer hailed this agreement as a major achievement and a "landmark deal with far-reaching economic implications."

Unfortunately, the “far-reaching economic implications” from a landmark deal like this would not be limited to the parties to the agreement. It would certainly result in equally far-reaching implications for their trading partners. The United Kingdom and India are Sri Lanka’s second and third-largest trading partners for exports. So, what would be the implications of this FTA for Sri Lanka?

Implications on “Bystanders”