Despite the positive outlook, geopolitical tensions, particularly between India and Pakistan, may pose risks that investors need to manage.

Under the agreement, tariffs on whisky and gin will be halved from 150% to 75%, eventually dropping to 40% by the tenth year, while automotive tariffs will decrease from over 100% to 10% under a quota.

While this deal marks an important step forward, it has faced criticism for lacking ambition, particularly in addressing key issues like immigration and legal services.

The UK and India have signed a landmark Free Trade Agreement (FTA) aimed at reducing costs, boosting exports, and enhancing access to the rapidly growing Indian market.

This significant deal was announced on May 6, 2025, after more than three years of negotiations that encountered multiple delays.

Overall, the agreement reflects a pragmatic approach to global trade, providing stability for businesses and consumers amidst global uncertainties.

The agreement also encourages collaboration in emerging fields like artificial intelligence, cybersecurity, and digital transformation, fostering an environment conducive to startups and innovation.

The FTA is the culmination of negotiations that began in January 2022, gaining momentum after meetings between the two countries' leaders at the G-20 Summit in November 2024.

While discussions over a bilateral investment treaty to protect investments between the two nations are ongoing, a separate treaty on social security contributions has been completed.

Legal services were excluded from the trade agreement at India's insistence, although there is optimism about building bilateral legal relationships in the future.

Challenges remain, including the need for regulatory harmonization and ensuring that small and medium enterprises benefit from the FTA.

Experts believe that the FTA can serve as a catalyst for domestic reforms in India, addressing structural deficiencies in the economy.