The UK has a new trade deal with India – the biggest win is yet to come

In the week leading up to Andy Burnham’s first day in Downing Street, the UK and India brought a landmark new trade agreement into effect. 

 

The UK-India Comprehensive Economic and Trade Agreement (CETA) – also known as the UK-India Free Trade Agreement (FTA) – boasts headline numbers that aren’t to be sniffed at. But the deal itself isn’t the achievement. It’s a starting point for long-term, enduring growth across both economies, and will only be a true success if we continue to build on top of it.

 

What is certainly true, though, is that it couldn’t have come at a better time. The Burnham government inherits not only a new trade agreement, but all the momentum that comes with it. The thing to be done now is to capitalise on that momentum and make UK-India relations a core part of its growth agenda from day one, ensuring that the FTA becomes something people and businesses in both India and the UK actually feel.

 

People, not policies

I have spent decades building businesses across both countries, and if there is one thing that experience has taught me, it’s that trade agreements don’t create growth in and of themselves. People do.

 

Policy is absolutely important. It’s a facilitator. It sets the frame. But it’s the entrepreneurs, investors, and the talented workers who fill it in. It’s them who build on that frame and create partnerships, opportunities, and growth that generates genuine, enduring value for both parties. 

 

That’s why, while the headline tariff cuts matter, I think the FTA’s biggest achievement is the access it provides to markets, partners, capital, and expertise that might otherwise have felt out of reach. This is especially true for small- to mid-sized enterprises (SMEs). Big firms – with big, corporate legal teams – often find ways to navigate the patchwork of rules and regulations that govern UK-India trade. But for SMEs, those obstacles can become insurmountable.

 

The FTA clears a path for them to find each other. It sets up dedicated contact points for SMEs, making it easier to discover partners in the UK or India. It opens government contracts, from the NHS to Indian procurement, to firms that never had a seat at that table before. And it lets employees move between the two countries without a tax penalty for doing so. In short, it removes friction – and in the absence of friction, relationships can be built.

 

 

Helping growth happen

The framework that the FTA provides allows for the creation of a genuine two-way exchange of investment, talent, and innovation, but now we need to capitalise on it. It’s here, in the thousands of small partnerships that will be formed quietly over the next decade, that the long-term growth potential of the FTA sits.

 

And to make that a reality, we need a mindset shift. Trade between the UK and India has often been viewed through a narrow lens, as if one side provides the capital and the other provides the labour. But that is not the case, and it has not been the case for a long time.

 

India is producing world-class entrepreneurs, technologists, and problem-solvers who are already scaling globally. The UK continues to offer deep expertise in finance, professional services, higher education, and international market development. The strongest partnerships I have seen are built on mutual respect, with both countries bringing different strengths and learning from one another, and I think the FTA will work best when it is read in that spirit.

 

That brings me to why I think the new Burnham government presents such a great opportunity for the India-UK relationship. With the deal still fresh and momentum still strong, the UK has an opportunity to make it count and ensure the India-UK relationship is a core pillar of its growth agenda.

 

India is one of the world’s fastest-growing major economies, and it’s a growth you can really feel. I’ve been visiting more often, ahead of my eventual retirement in India, and each time I return, I’m taken aback by the pace of development. Trade between the UK and India is growing at a steady rate too, having increased 10% year-on-year to reach £47.9 billion (Grant Thornton). But, above all, a UK-India partnership just makes sense. The UK has one of the largest Indian diasporas of any country, and both countries share deep educational and cultural ties. We’re not building relationships from scratch; we’re building on what already exists.

 

Now, what the UK needs to do is put India at the centre from day one. Make it faster for skilled workers from India to come and work in UK finance, and for UK talent to work in India’s tech firms. Show, clearly and often, that India is a strategic priority for Britain’s growth, not a line item mentioned once and quietly forgotten.

 

None of this asks businesses to force open a door – because it’s already open. What government can do is make walking through it feel effortless, clearing away the friction and signalling that this partnership matters. Do that, and businesses will follow. They always do when the way is clear.

 

Trade agreements can sometimes feel like just another announcement, but I find this moment genuinely exciting. The deal was the hard part, negotiated over years. What comes next – backing good people, encouraging patient capital and treating the corridor as something to build on – is the rewarding bit.

 

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Sukhpal Ahluwalia is an Indian entrepreneur and investor based in London. He’s best known for founding Euro Car Parts, which he scaled from a single shop in Wembley into a business he sold for £280mn. He now acts as Executive Chairman for GSF Car Parts, the fastest-growing car parts distributor in the UK, and is Founder and Non-Executive Chairman of Dominus, a real estate and private equity business.

 

Main image courtesy of iStockPhoto.com and MicroStockHub