Context: India-U.K. goods trade surged 60% in eight years; imports nearly doubled

Source: The Hindu

Over the years, India’s overall commerce trade with the United Kingdom has increased gradually, reaching $19.3 billion in 2024–2025 and January 2025. Nonetheless, import growth has significantly outpaced export growth.

Nearly half of India’s exports to the United Kingdom are made up of just five product categories: Pearls, Precious and Semi-precious Stones (7%), Nuclear Reactors, Boilers and Machinery (11.6%), Mineral Fuels and Oils (9.1%), Electrical Machinery (15.3%), and Pharma Products (5.4%). After the Free Trade Agreement with the United Kingdom is put into effect, the largest category, Machinery and Engineering Goods, is probably going to experience rapid development. At the moment, India’s sixth-largest export market for engineering is the United Kingdom.

Pearls, precious and semi-precious stones (30.5%), nuclear reactors, boilers, and machinery (17.4%), electrical machinery (7.2%), iron and steel (5%) and aluminium and related components (4.5%) are the top five import product categories, which together account for 65% of India’s imports from the United Kingdom. As of 2024–2025, $7.3 billion is being imported and $12 billion is being exported.

Model Question:

“The proposed India–U.K. Free Trade Agreement (FTA) reflects the changing contours of bilateral relations in a post-Brexit and post-pandemic world.” Examine the strategic and economic significance of this agreement for India.

Model Answer:

India and the United Kingdom, once bound by colonial ties, are now seeking a reinvigorated economic partnership in the wake of Brexit and the COVID-19 pandemic. The proposed India–U.K. Free Trade Agreement (FTA), currently under negotiation, marks a shift in their bilateral dynamics and offers strategic and economic opportunities for India.

Economic Significance:

1. Market Access: The FTA will give Indian exporters preferential access to the U.K. market, especially in textiles, pharmaceuticals, IT, and food products.
2. Investment Promotion: With the U.K. keen to diversify post-Brexit, India can attract greater FDI in fintech, education, and green energy.
3. Job Creation: Enhanced trade flows and services exports are likely to generate employment in India’s MSME and IT sectors.
4. Export Diversification: Reduces dependence on traditional partners like the EU and the U.S.

Strategic Significance:

1. Global South–Global North Partnership: The deal symbolizes a growing voice of the Global South in shaping new trade norms.
2. Indo-Pacific Presence: U.K.’s tilt towards the Indo-Pacific aligns with India’s strategic vision.
3. Post-Brexit Recalibration: The U.K. seeks deeper ties with Commonwealth and democratic economies, and India fits both categories.

The India–U.K. FTA reflects evolving global geopolitics and geoeconomics. If designed with sensitivity to each other’s developmental priorities, the FTA could mark a new era in India–U.K. relations beyond symbolism — with long-term strategic and economic dividends.