Decoding India-UK Free Trade Agreement

Decoding India-UK Free Trade Agreement

Indian Market
by Shreya Anaokar Last Updated: 2022-08-23T12:16:58+05:30

United Kingdom is India’s seventh largest export destination and sixth largest FDI source. Recently India and United Kingdom concluded their 5th round of discussion of the Free Trade Agreement, with an objective to improve trade and investment relations. The Free Trade Agreement is likely to be signed by October 2022. 
But before decoding this Free Trade Agreement let us try to understand some concepts and check some facts.

What is a Free Trade Agreement?

Free Trade Agreement is a trade agreement between two or more nations to reduce trade barriers. This agreement includes reducing tariffs, quotas, subsidies, or prohibitions which may affect the exchange of goods and services among the nations.
It also involves a formal and mutual agreement signed between two or more countries. The agreement could be comprehensive and include goods, services, investments, intellectual property, competition, government procurement, etc.

How does the Free Trade Agreement Work?

In the modern world, a formal and mutual agreement between the participating countries is frequently used to implement free trade policy. A free-trade policy, however, might just be the absence of any trade limitations.

To encourage free trade, a government is not required to take any specific action. Laissez-faire trade or trade liberalisation are terms used to describe this laissez-faire approach.

Governments with free-trade agreements or policies in place don't necessarily give up all import and export regulations or do away with all protectionist measures. Few free trade agreements (Free Trade Agreements) in contemporary global trade lead to completely free trade.

Which countries have signed the Free Trade Agreement with India?

As of April 2022, India has signed 13 Free Trade Agreements with countries like Nepal, Bhutan, Thailand, Singapore, Japan, Malaysia, Mauritius, UAE, and Australia. India has also signed 6 limited Preferential Trade agreements.

The India-United Kingdom Free Trade Agreement status:

In addition to having a strong bilateral trade relationship, India and the United Kingdom have a multi-faceted strategic partnership. There are 50 billion dollars in bilateral trade, with 35 billion dollars in services and 15 billion dollars in goods. India made up 1.9% of all United Kingdom trade in each of the first four quarters of FY2022. India has largely maintained a surplus in its trade balance with the United Kingdom. Technical, trade-related, travel-related, other business services, and professional and management consulting services are the top three services exported from India to the United Kingdom.

The two nations decided to advance their trade and investment relations by starting formal negotiations for a free trade agreement in January 2022. 

On July 29, the fifth round of Free Trade Agreement negotiations came to an end. By October, it was anticipated that negotiations would be finished and the groundwork for the Free Trade Agreement would be laid. The Free Trade Agreement is crucial for both countries because it would strengthen the framework for overall trade and investment between them.

How this Free Trade Agreement will benefit India?

Along with lowering tariffs, the Free Trade Agreement also aims to lower non-tariff trade barriers, particularly technical ones related to investor protection, rules of origin, and intellectual property rights (IPR). A framework agreement on the healthcare workforce, as well as memoranda of understanding on the joint recognition of specific educational qualifications, have already been signed. Additionally, the United Kingdom and India have established panels for a totalization agreement that allows Indian legal services for the United Kingdom and is supported by India.

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About the Author

Shreya Anaokar is a Content Writer at 5paisa. She has completed her Master’s in Finance and Graduation in Statistics from the University of Mumbai. 


Investment/Trading is subject to market risk, past performance doesn’t guarantee future performance. The risk of trading/investment loss in securities markets can be substantial. Also, the above report is compiled from data available on public platforms.

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