FTA Explained: What the UK–India Trade Partnership Means for Businesses?

The UK–India FTA aims to boost trade by cutting tariffs and easing regulations. This article explores what the agreement means for businesses on both sides.

Sep 18, 2025

This article is authored by Commenda, a trusted partner that supports businesses in navigating global trade by offering expert advice on compliance, market access, and strategic growth opportunities.

The United Kingdom and India share one of the world’s most important bilateral trade relationships, built on growing economic ties and longstanding Commonwealth connections. In 2021, the two countries launched the Enhanced Trade Partnership (ETP) as a first step toward closer cooperation and a pathway to a broader free trade deal. After more than three years of negotiation, that goal was realised in July 2025 by signing the Comprehensive Economic and Trade Agreement (CETA).

The CETA lowers tariffs on the vast majority of goods, creates new channels for cooperation in services and digital trade, expands access to government procurement, and facilitates easier professional mobility across both markets.

This article explores what the agreement means for businesses in India and the UK- highlighting the opportunities, shifts in market access, and how companies can use the new rules to unlock practical business benefits.

How does the Enhanced Trade Partnership Work for Businesses?

The UK–India CETA removes or phases out tariffs on more than 90% of goods traded between the two countries, while also creating clearer rules for services and investment.

The core provisions fall into three main areas:

Tariff reductions: Indian exporters gain cost advantages in textiles, apparel, automotive components, and agricultural products, improving their competitiveness in the UK. British businesses benefit from lower barriers in sectors such as spirits, pharmaceuticals, and advanced manufacturing, with access to India’s rapidly growing middle-class market, which is projected to reach more than half a billion people by 2030.
Simplified customs procedures: The agreement commits to shorter clearance times and reduced administrative delays at ports, lowering compliance costs and making supply chains more predictable.
Regulatory co-operation: Provisions on digital trade and professional services aim to create more consistent standards for cross-border operations, supporting firms that rely on data flows, licensing, and service delivery.

By establishing lower trade barriers and clearer rules of engagement, the CETA demonstrates a long-term commitment to deepening economic ties and promoting increased foreign direct investment between the two economies.

Risks and Considerations

While the CETA is a big step forward, it’s not a silver bullet. Here’s what businesses should be aware of:

Not Everything Is Covered
The agreement lowers many trade barriers, but some sensitive goods are still excluded. Plus, tariff cuts for certain sectors will be rolled out gradually, meaning exporters in those areas will continue to face challenges in the short term.
Regulatory Hurdles Remain
Both the UK and India have strict product standards, certifications, and compliance rules. The agreement promotes cooperation between regulators, but companies must navigate local requirements to get their products to market.
Currency Fluctuations and Economic Uncertainty
Exchange rate swings can eat into profits, especially for small and medium enterprises. In addition, broader economic pressures, like post-Brexit changes in the UK, mean businesses will need to actively plan for financial risks.

These risks do not diminish the value of the agreement, but they make clear that success will depend on careful execution. With the opportunities now in place, the question is how businesses can translate them into their gains.

How Businesses Can Leverage the Agreement?

The CETA establishes opportunities at a policy level; the challenge for businesses is to convert those into commercial benefits. Companies are most likely to succeed if they plan ahead and invest in the enablers that make cross-border trade work in practice. Key areas of focus include:

Market entry and expansion strategies: Tariff reductions create new commercial openings, but identifying the right niches is critical.
Indian exporters can target UK premium segments that reward quality, while UK firms can explore India’s expanding consumer and service markets. Do market research to understand demand, map distribution networks, secure local partners, and build pricing models that make expansion sustainable.
Financing trade efficiently: Lower duties only matter if transactions can move smoothly. Modern trade finance tools, cross-border payment gateways, and digital settlement systems reduce friction by speeding up payments and improving reliability.
They also help manage currency risk and give better visibility over cash flows. For SMEs, timely and affordable trade finance can be the deciding factor in competing for new contracts.
Meeting compliance standards: Both countries maintain rigorous product and regulatory checks. In the UK, certification and testing requirements can be resource-intensive, but they also allow exporters to command higher margins and customer trust.
In India, regulatory differences between states add complexity for foreign entrants. Firms that integrate compliance into their expansion plans early, supported by local advisory where needed, will find long-term growth more sustainable.
Operational readiness: Even with reduced tariffs, supply chains will only function effectively if businesses put the right logistics, documentation and tax systems in place. Errors at ports or in filings can quickly offset cost savings.
Platforms that simplify entity setup, compliance management, and payments infrastructure provide an edge by ensuring smooth day-to-day execution.
Building partnerships: Local knowledge and networks remain vital. Collaborating with distributors, service providers, and financial institutions can help new entrants establish credibility and market presence faster.

Looking ahead, the CETA is just one piece of a bigger trade picture. Future talks could open up new areas like government contracts, investment safeguards, and easing regulations. Businesses that learn the ropes under the current agreement and prepare for deeper collaboration will be in the strongest position as the partnership grows.

Final Thoughts

The Comprehensive Economic and Trade Agreement (CETA) between the UK and India goes far beyond simply reducing tariffs. It creates a structured and predictable environment that helps businesses plan for the future, invest confidently, and explore new markets without constantly worrying about sudden policy shifts or unclear regulations.

That said, it’s not without its challenges. Dealing with regulations, meeting compliance standards, and managing currency ups and downs can still be tricky, especially for smaller businesses or those trying to break into new markets. However, the good news is that the agreement supports businesses that are prepared and willing to put in the work.

In a world where markets are constantly shifting, being prepared can make all the difference. The CETA gives businesses the tools they need; it’s up to them to make the most of them. Those who take the initiative now will benefit the most as the partnership grows.