Trade between the UK and India is entering an important new phase following the signing of the UK–India Free Trade Agreement (FTA) in July 2025. While the agreement is still progressing through final ratification in both countries, its direction is clear, and its impact is already influencing commercial planning for 2026.
UK–India trade in goods and services totalled approximately £47.2 billion in the year to late 2025. Once fully implemented, UK Government estimates suggest the agreement could increase bilateral trade by around £25.5 billion per year, strengthening long-term economic ties between the two markets.
Current Status of the Agreement
The FTA was signed in July 2025 and is now moving through domestic approval processes. In the UK, the agreement is undergoing Parliamentary scrutiny under the Constitutional Reform and Governance Act (CRaG). In India, approval is expected via cabinet sign-off. While the agreement is not yet legally in force, current expectations are that it will take effect during 2026, subject to completion of these procedures.
For many businesses, this means 2026 will be the year when planning shifts into practical action.
What the Trade Agreement Changes
The agreement introduces substantial tariff reductions designed to improve market access on both sides.
For UK exports to India, tariffs on around 90% of UK tariff lines are due to be reduced or eliminated over time. This includes notable changes for products such as Scotch whisky, where duties are being halved initially with further staged reductions, and for UK-manufactured vehicles, where tariffs are set to fall from levels above 100% to around 10% within agreed quotas.
For Indian exports to the UK, 99% of goods are expected to become tariff-free. This is particularly relevant for sectors such as textiles, leather goods, jewellery and manufactured consumer products, where duties have historically increased landed costs.
What This Means for Businesses in 2026
As tariffs reduce, trade volumes are expected to rise steadily. Supply chains that previously handled occasional movements may need to scale more quickly and consistently.
At the same time, compliance will become increasingly important. Preferential tariffs rely on meeting rules of origin requirements and submitting accurate customs documentation. Businesses that prepare early will be better placed to avoid delays, lost savings or unexpected charges as volumes increase.
Sectors expected to see increased activity include manufacturing, automotive components, pharmaceuticals, consumer goods and food and drink. As competition grows, efficiency, reliability and visibility across supply chains will become key differentiators.
Key Considerations
While the UK–India FTA creates new opportunities, not all changes will happen immediately. Some tariff reductions will be phased in over time, and certain products remain excluded.
To benefit from reduced duties, businesses must meet rules of origin requirements and ensure customs documentation is accurate. Without this, preferential rates may not apply.
As trade volumes increase, customs checks and compliance will become more important, making preparation and reliable logistics support essential. Although the agreement has been signed, final implementation is still subject to domestic approval, so timelines may vary in 2026.
Preparing for UK–India Trade
Working with a freight forwarder who understands the India trade lane can make a real difference, particularly when it comes to documentation, customs requirements and knowing how things work in practice. With over 45 years of experience in international freight forwarding, we’ve supported businesses trading with India for many years and understand the challenges that can arise along the way.
If you’re importing from or exporting to India, we’re here to help you review your supply chain and prepare for the changes ahead in 2026 and beyond. Feel free to get in touch with our team to talk through your plans.
References
UK Government – UK–India Trade Deal Overview
https://www.gov.uk/government/collections/uk-india-trade-deal
UK Government – UK–India Free Trade Agreement Impact Assessment
https://www.gov.uk/government/publications/uk-india-free-trade-agreement-impact-assessment
House of Commons Library – UK–India Free Trade Agreement Briefing
https://commonslibrary.parliament.uk/research-briefings/cbp-10258/
British Chambers of Commerce – UK–India Trade Deal Explainer
https://www.britishchambers.org.uk/policy-campaigns/global-britain/our-solutions/uk-india-trade-deal-explainer/
Please note: This article is accurate as of 22 January 2026. Trade agreements, regulations and implementation timelines are subject to change. For the most up-to-date information and advice specific to your business, please contact our team.