India-UK FTA to benefit labour-intensive industries like textiles: AIAI

The free trade agreement (FTA) aligns with India’s larger vision of achieving $ 2 trillion in exports in the coming years, says Dr Vijay Kalantri, President, All India Association of Industries (AIAI).

Dr Vijay Kalantri, President of the All India Association of Industries (AIAI) and Chairman of MVIRDC World Trade Center Mumbai, has welcomed the signing of the India-UK Free Trade Agreement (FTA), describing it as a historic and transformative milestone in India’s foreign trade policy journey.

“At a time of growing protectionism and global trade uncertainties, this modern and comprehensive FTA reaffirms India’s commitment to rules-based global trade and deep economic integration with leading economies,” Dr Kalantri stated. “It reflects India’s dynamic approach to international trade, focused on boosting exports, strengthening industries, and generating employment.”

Covering 99 per cent of tariff lines and almost 100 per cent of the trade value, the agreement offers nearly complete tariff elimination for India in the UK market across a wide array of goods and services. Sectors expected to benefit include labour- and technology-intensive industries such as textiles, leather, marine products, sports goods, toys, gems and jewellery, engineering goods, automotive components, and organic chemicals. “This level of market access will greatly enhance the competitiveness of Indian products in the UK, providing a vital edge over its competitors,” Dr Kalantri remarked.

He particularly emphasised the immense benefits for India’s MSMEs ecosystem, which forms the backbone of the country’s manufacturing and exports. The FTA simplifies regulatory requirements and reduces non-tariff barriers, enabling Indian MSMEs to enter and expand in the UK market with greater ease.

A standout feature of the agreement is the exemption of Indian professionals and their employers from paying social security contributions in the UK for up to three years. “This provision will significantly reduce the financial burden on Indian service exporters and enhance their competitiveness, especially in IT, financial services, architecture, engineering, and education,” Dr Kalantri noted. “It also opens new job opportunities and strengthens India’s position as a global services hub.”

The agreement also ensures easier mobility for Indian professionals, business visitors, intra-corporate transferees, and independent professionals such as yoga instructors and artists, reinforcing the deepening people-to-people ties between India and the UK.

Dr Kalantri highlighted that the FTA aligns with India’s larger vision of achieving USD 2 trillion in exports in the coming years. “With this being the 14th FTA India has signed in the past decade, we are clearly witnessing a shift in strategy from a defensive to a proactive trade policy. This new deal will also lend momentum to India’s ongoing trade negotiations with the European Union and other major economies.”

He added, “This FTA will pave the way for stronger bilateral relations and play a pivotal role in cushioning the impact of recent US tariff hikes. However, to fully leverage such FTAs, India must focus on enhancing the capacity and competitiveness of its industries. Expanding the scope of the Production Linked Incentive (PLI) scheme to include more sectors could be a strategic step in this direction.”

He further noted that the agreement reflects both nations’ shared commitment to fair trade, transparency, and regulatory cooperation. “As two vibrant democracies and global innovation hubs, India and the UK have set a benchmark for ambitious and forward-looking trade agreements.”