The “historic” free trade agreement (FTA) between the UK and India provides strategic advantages and stability for businesses at a time of significant global economic uncertainty, according to a new report by the House of Lords International Agreements Committee.
The cross-party committee, responsible for scrutinising all treaties laid before Parliament, launched its review of the India-UK Comprehensive Economic and Trade Agreement (CETA) in the months following its conclusion during Prime Minister Narendra Modi’s visit to the UK last July.
Benefits and opportunities
The report describes the deal as a “considerable achievement,” noting that negotiations were conducted amid a challenging geopolitical backdrop, including US trade tariffs under former President Donald Trump.
“The UK has reached a landmark deal with a key strategic partner at a time of considerable geopolitical turbulence,” said Lord Peter Goldsmith, chair of the committee during the inquiry.
“We also welcome that the agreement is compliant with World Trade Organisation rules, in light of the current challenges to the rules-based international order. It is a significant achievement, and the government should capitalise on this by ensuring businesses can utilise it in practice.”
The committee’s review, which considered evidence from government and business stakeholders, found that the FTA will support UK companies in diversifying and de-risking their supply chains. UK consumers are also expected to benefit from greater choice and lower prices once the agreement comes into force.
Shortcomings and missed opportunities
However, the report highlights several limitations. Benefits for UK goods exporters may take time to materialise, while Indian exporters gain immediate access to the UK market. Key UK interests, such as legal services and investment protection, were excluded from the final agreement. Additionally, the FTA offers limited new market access for financial or professional services.
“We recommend the UK and India view the FTA as a ‘living agreement’, rather than a static one, and prioritise strengthening the terms of the agreement as the relationship develops,” Lord Goldsmith added.
“The government should utilise the range of existing dialogue mechanisms and networks to further enhance the relationship in substantive and symbolic terms.”
The report also cautions that the recently agreed EU-India FTA may have future implications for UK-India trade, though it does not yet analyse these impacts in detail.
Recommendations for the UK government
To maximise the benefits of the agreement, the committee urged the government to:
- Publish an impact assessment of the cumulative effects of successive trade agreements on the UK agricultural sector.
- Continue bilateral engagement with India on services trade and non-tariff barriers.
- Support businesses, particularly small and medium-sized enterprises (SMEs), in using the agreement effectively.
- Clarify the enhanced support that will be provided through the High Commission in India and its regional offices in the UK.
The report stresses the importance of viewing the FTA as part of a wider, dynamic geopolitical context, and recommends that the government take steps to ensure the full potential of the deal is realised.
Economic impact
Dubbed a “landmark” agreement, the India-UK CETA is expected to boost annual bilateral trade by £25.5 billion, a significant increase on the £47.2 billion recorded in 2025 by the UK Department for Business and Trade (DBT). The agreement is currently under parliamentary scrutiny, with MPs and peers set to debate its provisions before ratification and implementation in the coming months.
