India-UK Free Trade Agreement: A Game-Changer for MSME Exports

By Eram Shaikh --
Thursday, 24 Jul, 2025

The recently signed India-UK Free Trade Agreement (FTA), formalized on July 24, 2025, in London, marks a transformative milestone for Indian Micro, Small, and Medium Enterprises (MSMEs). With 99% of Indian exports to the UK now enjoying duty-free access, MSMEs stand to gain significantly, particularly in sectors like textiles, leather goods, gems and jewelry, agricultural products, and software services. This landmark deal, signed in the presence of Prime Ministers Narendra Modi and Keir Starmer, is poised to elevate bilateral trade by $34 billion annually, with MSMEs at the forefront of this economic surge.

For MSMEs, the elimination of tariffs on 99% of export lines translates to enhanced competitiveness in the UK market. Sectors such as textiles and leather, where MSMEs dominate, are expected to capture an additional 5% market share within two years. This tariff-free access levels the playing field, allowing Indian MSMEs to compete with regional exporters like Bangladesh and Cambodia. The gems and jewelry sector is currently valued at $941 million in exports and is projected to double over the next three years as it will benefit from the cost advantages unlocked by the FTA. Agricultural exports, including processed foods, will also benefit from tariff parity with European nations, creating new opportunities for MSME farmers and producers.

The agreement’s impact extends beyond goods. Software services, a burgeoning MSME sector, are expected to grow at an annual rate of 20%, fueled by streamlined market access. The Trdae Deal is poised to also simplify mobility for Indian professionals while offering a three-year exemption from UK social security contributions for temporary workers. This reduces operational costs for MSMEs, enabling them to invest in innovation and expansion.

By fostering export growth, the FTA aligns with the 'Make in India' initiative, empowering MSMEs to scale operations, create jobs, and strengthen their global presence. The deal’s focus on comprehensive market access ensures that MSMEs across diverse sectors can capitalize on the UK’s demand for high-quality, cost-competitive products. As India aims to boost bilateral trade to $120 billion by 2030, MSMEs will play a pivotal role in driving economic prosperity, making this FTA a catalyst for their growth and global integration.

India-UK Free Trade Agreement: A Game-Changer for MSME Exports. The recently signed India-UK Free Trade Agreement (FTA), formalized on July 24, 2025, in London, marks a transformative milestone for Indian Micro, Small, and Medium Enterprises (MSMEs). With 99% of Indian exports to the UK now enjoying duty-free access, MSMEs stand to gain significantly, particularly in sectors like textiles, leather goods, gems and jewelry, agricultural products, and software services. This landmark deal, signed in the presence of Prime Ministers Narendra Modi and Keir Starmer, is poised to elevate bilateral trade by $34 billion annually, with MSMEs at the forefront of this economic surge.

For MSMEs, the elimination of tariffs on 99% of export lines translates to enhanced competitiveness in the UK market. Sectors such as textiles and leather, where MSMEs dominate, are expected to capture an additional 5% market share within two years. This tariff-free access levels the playing field, allowing Indian MSMEs to compete with regional exporters like Bangladesh and Cambodia. The gems and jewelry sector is currently valued at $941 million in exports and is projected to double over the next three years as it will benefit from the cost advantages unlocked by the FTA. Agricultural exports, including processed foods, will also benefit from tariff parity with European nations, creating new opportunities for MSME farmers and producers.

The agreement’s impact extends beyond goods. Software services, a burgeoning MSME sector, are expected to grow at an annual rate of 20%, fueled by streamlined market access. The Trdae Deal is poised to also simplify mobility for Indian professionals while offering a three-year exemption from UK social security contributions for temporary workers. This reduces operational costs for MSMEs, enabling them to invest in innovation and expansion.

By fostering export growth, the FTA aligns with the 'Make in India' initiative, empowering MSMEs to scale operations, create jobs, and strengthen their global presence. The deal’s focus on comprehensive market access ensures that MSMEs across diverse sectors can capitalize on the UK’s demand for high-quality, cost-competitive products. As India aims to boost bilateral trade to $120 billion by 2030, MSMEs will play a pivotal role in driving economic prosperity, making this FTA a catalyst for their growth and global integration.