Onmanorama Explains | India-UK FTA: What’s in it for India and Kerala

India’s Free Trade Agreement (FTA) with the UK is poised to deliver a major boost to sectors such as agriculture, marine products, plantations, textiles, electronics, software, and more. It is also expected to unlock significant export potential for Kerala and other states.

Agriculture

• Over 95% of agricultural and processed food tariff lines, including pepper, cardamom, turmeric, mango pulp, jackfruit, millets, and pickles, will go duty-free under the FTA. This is expected to increase India’s agri exports by over 20% in the next three years, contributing to the national target of $100 billion in exports by 2030.
• Kerala’s spice and plantation farmers will especially benefit from smoother certification norms under the Technical Barriers to Trade (TBT) provisions, which will reduce compliance costs and delays.
• While India exports $36.63 billion worth of agri goods globally, the UK imports $37.52 billion but sources only $811 million from India, signalling vast untapped potential.
• Farmers of various states in the country are likely to benefit from the FTA. The primary beneficiaries are Maharashtra (grapes, onions), Gujarat (groundnuts, cotton), Punjab and Haryana (basmati rice), Kerala (spices), and the Northeastern states (horticulture).

Marine products

• India’s seafood exports to the UK are currently limited to 2.25% of its $5.4 billion marine imports.
• Exports will expand as existing tariffs of 4.2% to 8.5% on shrimp, tuna, fishmeal, and feeds are eliminated.
• Kerala, along with Andhra Pradesh, Odisha, and Tamil Nadu, is poised to benefit from increased access and price competitiveness in the UK market.

Plantation

• The UK currently accounts for 5.6% of India’s tea, 2.9% of its spices, and 1.7% of its coffee exports.
• Duty-free access will now accelerate growth, especially for Indian instant coffee, which competes with European suppliers like Germany and Spain. This will provide a platform for value-added products from Kerala’s plantations.

Textiles

• 11.7% of tariff lines to go duty-free. The FTA will remove tariffs on 1,143 product categories, offering zero-duty access to India’s textiles and apparel exports.
• This will offset the duty disadvantage India faced compared to Bangladesh, Pakistan, and Cambodia. India is expected to gain at least 5% additional market share in the UK within 1–2 years, especially in ready-made garments, home textiles, carpets, and handicrafts.

Engineering goods
India’s engineering exports to the UK, currently at $4.28 billion, could grow to $7.5 billion by 2029–30 with the elimination of tariffs (currently up to 18%).

Key products include electric machinery, auto parts, and construction equipment, with projected annual growth of 12.2%.

Electronics and software

• Zero-duty access for smartphones, inverters, and optical fibre cables will strengthen India’s electronics exports.
• In software and IT-enabled services, India, already exporting $32 billion globally, is projected to grow at 15–20% annually with improved UK commitments, creating new job opportunities and boosting service exports.

Pharmaceuticals and med-tech

• India exports $23.31 billion worth of pharmaceuticals globally, but its share in the UK market is under $1 billion.
• With the FTA eliminating duties, Indian generics will become more competitive in the UK.
• Medical devices, including ECG machines, diagnostic equipment, and X-ray systems, will also be duty-free.

Chemicals and plastics

• 30–40% export surge expected. Chemical exports to the UK are projected to reach $650–750 million in 2025–26, up from the current $843 million, thanks to improved market access.
• Plastics exports are projected to grow 15% annually, targeting $186.97 million by 2030, driven by demand for films, pipes, packaging, and kitchenware.

Sports goods, toys, and leather

• Tariff elimination on soccer balls, cricket gear, and toys will give Indian manufacturers an edge over China and Vietnam.
• Leather and footwear exports, currently taxed at up to 16%, will now enter the UK duty-free, helping hubs like Agra, Kanpur, Kolhapur, and Chennai grow their exports to over $900 million.

Gems and jewellery
India’s $941 million G&J exports to the UK, of which $400 million is jewellery, are expected to double in 2–3 years. The UK’s $3 billion jewellery import market offers substantial room for Indian expansion.

Other key benefits

• 99% of tariff lines will see zero duty, covering nearly all trade value.
• Tariffs on processed food, previously as high as 70%, will now be zero on 99.7% of lines.
• Base metal duties, once up to 10%, will be eliminated.

Services sector
The FTA facilitates mobility for:

• Contractual Service Suppliers: Professionals working on specific UK projects.
• Independent Professionals: Yoga instructors, classical musicians, chefs, etc., now face fewer hurdles in offering services.

What’s excluded
India is not giving any tariff concessions on sensitive sectors, dairy products, apples, oats, and edible oils.

How will Kerala benefit

• Kerala's toddy will get shelf space in British stores with Goa's feni and Nashik's artisanal wines. Though this is a new segment, the government expects the country's exports of alcoholic beverages to reach $1 billion by 2030 from the current $370.5 million.
• Duty-free access will now accelerate growth, particularly for Indian instant coffee, which competes with European suppliers such as Germany and Spain. This will provide a platform for value-added products from Kerala’s plantations.
• Spices and plantation crops: With over 95% of agri and processed food tariff lines going duty-free, Kerala’s iconic products like pepper, cardamom, turmeric, and processed items such as pickles and mango pulp gain greater access to the UK market. This is expected to stabilise domestic prices and boost farm incomes.
• Marine exports: Kerala’s seafood industry, particularly shrimp and tuna, will gain from zero tariffs in the UK.
• Coffee and tea: Duty-free access for instant and value-added coffee enhances Kerala’s prospects, especially as India competes with Europe’s dominant suppliers. Tea exports could also see an uptick with simplified market access.
• Textiles and garments: Kerala’s home-based textile and handloom units can benefit from zero-duty exports of garments, carpets, and handicrafts, helping them compete with suppliers from Bangladesh and Pakistan who already enjoy duty-free UK access.
• Ayurveda and organic products: Easier certification and new market access provisions for organic herbs and jackfruit-based products support Kerala’s growing interest in wellness exports and agri-diversification.