Historic deals… landmark moments. Turning twin trade breakthroughs into business opportunity

After years of hope and negotiation, the emergence of two bilateral trade deals for the UK within a matter of days was a bright moment for businesses with international ambitions, promising stronger partnerships at a time of heightened global uncertainty.

On examination, the agreements forged with India and the US are very different.

The UK-India free trade agreement is the culmination of years of intensive talks, and is correspondingly comprehensive. By contrast, the deal reached with the US is an outline and perhaps a demonstration of intent, offering a welcome lowering of trade barriers since the very recent past and provides a foundation for more detailed arrangements.

“For businesses, the high-level signing of trade agreements is just the start of the story,” says Stephanie Betant, Head of Global Trade Solutions at HSBC UK. “It’s vital that they get the support they need to turn these deals into practical benefits, whether through market insight, support to navigate export processes, or help with trade financing.”

Improved arrangements with India have long been a goal for successive UK governments, with good reason. India is now the world’s fifth largest economy by GDP, and is set to leap to third place by 2030.

The country’s growing middle class is a big draw. Consumer businesses, such as whisky and gin producers, are set to benefit from a halving of tariffs on their products, with further reductions to follow: this is predicted to boost Scotch whisky sales to India by £1bn over the next five years.

The agreement also opens up better access to the Indian market for the UK’s powerhouse services sector, including government procurement contracts valued at around £38 billion every year.

India has a huge appetite for advanced manufacturing and sustainability technologies in which UK expertise is strong. Aerospace, automotive, electrical circuits, medical devices and high-end optical products are among the sectors that will benefit from substantially reduced tariffs. There will also be access to India’s clean energy market, as the country seeks to meet ambitious renewables targets.

India’s highly skilled and multi-lingual population has cemented its status as an international hub for global capacity centres, from which corporates run multiple strategic functions, and as a prime target for tech companies. In future, UK manufacturers with Indian operations will enjoy preferential treatment for federal contracts.

“India remains relatively unexplored by UK business – it makes up less than 2% of UK export values – so the new agreement represents a valuable lift into this fast-growing market,” observes Stephanie Betant.

In fact, business between the two countries was already mounting before the deal was signed. Total trade in goods and services rose by 8.3% to £42.6 billion last year. The UK government estimates that as a result of the new deal, annual UK exports to India will grow by over 59%, a value of £15.7bn.

Investment is flowing in both directions too. In fact, India has been the second-largest source of foreign investment into the UK for the past five years.

“At HSBC UK, we received 36% more new business client referrals from HSBC India in the nine months to October 2024 than in the same period of the previous year,” notes Cora McLaren, Managing Director of International Subsidiary Banking.

“One of the key sectors driving new business here is the pharmaceutical industry, in which India is a global leader. This has a big societal benefit, extending the volumes of vital drugs produced at lower cost, and improving UK patients’ access to medicines.”

The agreement signed with the US may be less detailed, with much negotiation to follow – but it will nevertheless have a significant impact for many sectors, given the country’s long-standing status as the UK’s largest bilateral trading partner.

The lifting of all tariffs on UK steel and aluminium is a much-needed boost for that sector, while automotive producers have also welcomed the reduction of tariffs on their US exports. Agricultural producers will enjoy tariff-free quotas for exports as part of a reciprocal arrangement.

“UK businesses have always favoured the US as an attractive growth market, drawn by its stable economy, transparent regulatory environment and cultural similarities. This agreement is a hopeful sign that they can maintain that confidence.”

While the US deal is likely to come into effect in the near future, the India FTA, which is more comprehensive, will take longer and need to be ratified by both parliaments. But businesses with an interest in either territory should start planning now to derive the benefits, says Cora McLaren.

“At HSBC UK we stand ready to help businesses get to grips with the detail and make the most of these new opportunities. As a bank originally established to support international trade and the UK’s best trade finance bank for nine years running¹, we have a wealth of experience to share, as well as an unrivalled global footprint – including an extensive presence in both India and the US,” she says.

“We open our networks to our clients, working to make useful connections for the customer bases and supply chains of UK business. We also offer a full range of services to support international expansion, including flexible trade finance, global payments solutions and foreign exchange products.”