Posted on May 8, 2025
In the last eight years, India and the United Kingdom have experienced a tremendous rise in their bilateral trade in goods, which has increased by a whopping 60%. During the period from 2017 to 2025, the volume of trade increased from approximately $13 billion to more than $21 billion. This rise not only signifies the deepening of their economic relations but also the changing patterns of trade relations propelled by reciprocal interests in diverse sectors such as textiles, pharmaceuticals, and engineering products.
Key Drivers of the Trade Surge
A number of factors have been leading to this rise in trade between India and the U.K. The trade relationship has consistently developed from modest growth to a more dynamic economic partnership over the past ten years. The new India-U.K. Free Trade Agreement (FTA) has been instrumental in the development. By lowering or eliminating tariffs on most goods and streamlining trade regulations, the FTA has facilitated a more growth-friendly trade environment. This has resulted in enhanced market access and competitiveness for both countries’ exporters.
India’s Imports from the U.K. Almost Double
One of the most notable features of this upsurge is the almost doubling of India’s imports from the U.K. Particularly, India’s import demand for British goods, including machinery, chemicals, and automobiles, has increased. Relaxed trade restrictions through the FTA have helped make U.K. goods competitive in the Indian market. Also, the U.K.’s demand for specialized machinery and high-technology inputs matches India’s increasing industrial requirement, further contributing to imports.
The Complementary Nature of Trade
India-U.K. bilateral trade relationship features a complementary relationship. India sells textiles, pharma, diamonds, and engineering products to the U.K. and imports machines, chemicals, precious stones, and auto components from the U.K. Both-way trade is crucial to the two countries because it captures each economy’s peculiar strengths and competencies. The manufacturing capabilities of India, its growing pharmaceuticals and textile industry, complement the U.K.’s high-end technology and finance sectors.
Impact of the Free Trade Agreement
The India-U.K. FTA has certainly picked up the pace of trade between the two countries. By lowering or removing tariffs, the agreement has facilitated easier access to each other’s markets for both countries. In addition, the lowering of regulatory barriers to services and goods has triggered higher trade in both directions. For India, industry segments such as textiles, garments, and footwear have been significantly aided by greater access to the British market along with lowered costs. For its part, the U.K. has witnessed advantage for its motor vehicles, machinery, and alcohol sector industries.
Towards the Future
The continuing trade boom between the U.K. and India will continue growing upwards. Estimates are that bilateral trade may double by 2030, with additional impetus being provided by the far-reaching terms of the FTA. Indian exporters, especially in labor-intensive industries like textiles, pharmaceuticals, and engineering products, can gain significantly from these developments. The wider economic cooperation between India’s manufacturing and IT services and the U.K.’s tech and financial services will continue to grow, laying the ground for reciprocal economic progress.
In conclusion, the increasing trade relationship between India and the U.K. is a strategic convergence of both economies, prompted by the prospects of sectors of complementary strengths. With the FTA allowing easier trade and investments, the future of India-U.K. trade is bright, promoting a mutually rewarding partnership for years to come.