India-UK FTA to boost market access, signals shift to bilateral trade: Sitharaman

Finance Minister Nirmala Sitharaman

Finance minister Nirmala Sitharaman has said the Free Trade Agreement (FTA) that India signed with the United Kingdon on May 6 marked “a new era in bilateral trade”, which would offer wider market access to Indian exporters and spur industrial innovation.

Speaking at the NEXT Milan Forum’s plenary session on Balancing Economic and Climate Resilience at Bocconi University, Sitharaman stressed on the importance of bilateral deals in the current global trade environment.

“This agreement will mean greater market access to Indian exporters. Industries and innovation can flourish. Signing bilateral agreements is the order of the day today. Multilateral agreements were in currency for sometime but today seems to be the time for countries to chalk their own bilateral arrangements,” Sitharaman said in a post on X.

The minister highlighted broader pivot toward bilateral arrangements, driven by multilateral frameworks losing effectiveness in the face of rising protectionism.

The deal, finalised after multiple rounds of negotiation, is expected to benefit nearly 99 percent of Indian exports to the UK by reducing or eliminating tariffs over time.

It much-awaited agreement comes at a time when the global trade strategy in moving in favour of bilateralism amid growing fragmentation in the multilateral trading system.

Announcing the deal, Prime Minister Narendra Modi said, “In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies.”

The India-UK FTA is the most comprehensive deal signed by the United Kingdom since its exit from the European Union.

It comes amid increasing trade uncertainty triggered by geopolitical tensions and US’ tariff actions, which have upended global commerce.

An FTA is a pact between two or more countries to reduce or eliminate barriers to trade such as tariffs, import quotas, and preferences on most goods and services traded between them. The India-UK FTA, in particular, covers a wide range of sectors and is expected to significantly enhance trade flows by simplifying market access rules.