In Mumbai, Welspun Living, an Indian home-textiles giant that makes towels for Wimbledon, is at the center of new business planning as the India-UK free trade agreement (FTA) takes effect. The deal, which removes or reduces tariffs on 99% of Indian exports to the UK and 90% of UK imports into India, aims to bolster trade between the world’s fifth and sixth largest economies and is already prompting brands to map longer-term partnerships with UK clients.
“Many of these brands have been in India in recent weeks to chart a business roadmap for the next few years. We typically did joint forward planning only for our US customers, but now, with the deal, it’s happening with UK clients too,” said Dipali Goenka, CEO of Welspun Living. The FTA is being billed by the British government as the country’s biggest and most economically significant bilateral trade pact since leaving the EU, with estimates of GDP gains attached.
Economists and trade specialists note that the long-run effects will depend on how quickly firms adapt to the new tariff schedule and compliance requirements. In textiles, garments, footwear, and related sectors, the agreement could unlock greater volumes and higher margins for products that previously faced tariffs in the 4% to double-digit range.
The deal’s impact on Scotch whisky is highlighted as a standout change, with the duty on imports to the UK scheduled to fall sharply over time, a development traders view as material for the spirits sector. Importers say the priority now is to align certificates of origin, origin documentation, and customs procedures to ensure shipments qualify for the tariff reductions from day one.
However, observers caution that the overall effect may be incremental rather than transformational. A large portion of India’s eligible exports remains outside preferential treatment, and many small businesses will require guidance to navigate new rules and take full advantage of the FTA’s preferences. Industry forecasts emphasize that robust administrative support will be essential to translate tariff cuts into higher exports.
Trade data from the Delhi-based Global Trade Research Initiative (GTRI) shows India exported about $13.4 billion of goods to the UK in the 2025-2026 financial year, with more than half of those exports moving under MFN terms rather than under preferential arrangements. On the UK side, India’s imports totaled about $11.7 billion, with a large share consisting of silver, which remains outside India’s current agreement coverage.
Analysts say the switch to lower tariffs will be tested in the next one to three years as firms adjust pricing, renegotiate contracts, and invest in compliance workflows. Ajay Srivastava of GTRI notes that the real test will be whether products that faced 4%–16% tariffs previously—textiles, garments, footwear, carpets, cars, seafood, grapes, mangoes—see higher orders and better profitability as a result of the agreement.
CareEdge Research highlights potential gains in India’s ready-made garments sector, pointing to a possible rise in India’s UK RMG market share from about 6% in 2024 toward 12% in the near to medium term, aided by the tariff liberalization and diversified sourcing strategies in UK fashion and retail.
Still, structural impediments persist. Some UK non-tariff measures, ongoing steel tariff quotas, and the carbon border mechanism (CBAM) could temper the boost from tariff reductions. Trade observers stress that the full benefits will materialize only with proactive government and industry coordination to educate exporters, streamline documentation, and ensure compliance with origin rules.
Overall, bilateral trade could grow at a faster pace than recent trends—potentially lifting annual growth to around 12% or higher, according to CareEdge—while consumers in both markets stand to gain from improved product quality and wider choices.
