India recently demonstrated that it can drive a hard bargain in trade negotiations when it secured favourable terms on steel under its free trade agreement with the UK. In a protectionist move, Britain had announced a 60 percent reduction in tariff-free steel import quotas from June 2026, along with a 50 percent duty on shipments exceeding the limit. The decision could have become a speed-breaker for the FTA, as India had threatened to revisit the tariff concessions it had offered if its steel exports were adversely affected. However, both sides arrived at a middle ground where around 85 percent of India’s steel exports to the UK would be shielded from the restrictions. It underscores India’s growing ability to safeguard its domestic industries while negotiating ambitious trade deals.
Equally important is the speed with which the two countries are moving from signing the agreement to its implementation, highlighting their shared urgency in strengthening trade ties in an era of increasing geopolitical uncertainties. The Prime Ministers of India and the UK, who met on the sidelines of the G7 Summit in France, announced that the FTA will come into force on July 15, less than a year after it was signed. While the finer details of the revised agreement will be made public on July 1, the Indian government indicated it has been able to “resolve all issues”.
Another significant gain is the extension of social security exemptions for Indian employees working in British subsidiaries or affiliates. They will now be exempted from making social security contributions in the UK for up to five years—provided they continue contributing to India’s social security system. Earlier, this exemption was limited to three years.
The FTA is expected to open up a $500-billion market for India, giving exporters a tariff advantage of 7-10 percent through the phased elimination of duties on most traded products. It also provides Indian suppliers access to the UK’s $122-billion public procurement market. This should create significant opportunities for Indian businesses, particularly smaller enterprises and labour-intensive sectors. However, implementing the agreement is only the first step towards reaping its benefits. The government must ensure that smaller exporters are informed of the opportunities and are equipped to meet the technical, regulatory and legal requirements to make the best of them. That is when the deal would yield its dividend in jobs.
