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India–UK Sign FTA; Pharma Sector to Gain from Tariff Elimination, Regulatory Cooperation and Expanded Market Access

India and the UK have signed a Free Trade Agreement that removes tariffs on pharmaceutical exports and medical devices, and includes provisions for regulatory cooperation in the health sector.

• By Pooja Sah
• New Delhi
• Jul 24, 2025

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India and the United Kingdom on Thursday signed a Free Trade Agreement (FTA) aimed at enhancing bilateral trade and investment. The agreement was finalised in London during Prime Minister Narendra Modi’s official visit to the UK. It is the first major trade pact signed by India with a developed Western country in over a decade and the most comprehensive trade agreement concluded by the UK since Brexit.

The agreement covers trade in goods and services, investment promotion, customs cooperation, intellectual property, digital trade, and regulatory alignment. Both governments have stated that the agreement is intended to reduce trade barriers, create jobs, and support long-term economic cooperation.

Pharma Sector Gains from Tariff Elimination and Regulatory Cooperation

Pharmaceuticals have been identified as a priority sector in the agreement. With the FTA coming into effect, Indian pharmaceutical products exported to the UK will be granted duty-free access. This includes a range of products such as generic formulations, active pharmaceutical ingredients (APIs), biologics, and nutraceuticals.

According to the Department of Commerce, the UK is currently one of India’s top five export destinations for pharmaceutical products. In FY 2023–24, Indian pharmaceutical exports to the UK stood at approximately USD 740 million. With the removal of import duties, Indian exporters are expected to become more competitive in the UK market, particularly in the generic drug segment, which constitutes a large share of India’s global pharma exports.

The agreement also lays the foundation for regulatory cooperation between India’s Central Drugs Standard Control Organisation (CDSCO) and the UK’s Medicines and Healthcare products Regulatory Agency (MHRA). Both countries will work toward mutual recognition of inspections, technical consultations on quality standards, and greater coordination on pharmacovigilance data. This may reduce duplicative compliance processes and facilitate faster market entry for Indian products.

Medical Device Sector Included in Tariff Reductions

The agreement also addresses medical technology and healthcare equipment. India has committed to reducing import tariffs on British medical devices, including high-value products such as diagnostic imaging machines, endoscopic tools, orthopaedic implants, and precision surgical instruments. Tariffs on such equipment, which currently range from 10% to 15%, will be reduced to around 3%.

India imports more than 75% of its medical devices, and UK-based manufacturers are expected to benefit from the improved access. At the same time, hospitals and healthcare providers in India could see reduced costs for imported medical technologies.

Contract Manufacturing and Clinical Research May Expand

The FTA also includes provisions to promote investment and partnerships in life sciences. Indian pharmaceutical companies may expand their contract manufacturing services for UK-based firms looking to optimise production costs post-Brexit.

Additionally, the agreement highlights the potential for collaboration in clinical trials, biotechnology research, and joint ventures in vaccine and biosimilar development. While these areas are not covered under binding obligations in the text, they are expected to be taken up by sectoral working groups to be formed under the trade implementation framework.

FTA Comes After More Than 13 Rounds of Negotiations

Negotiations for the India–UK FTA began in January 2022 and spanned over 13 formal rounds. The talks covered complex issues such as tariffs, rules of origin, investment protection, data regulations, and market access for services. Disagreements over mobility of professionals, alcohol duties, and regulatory standards delayed the conclusion of the deal on multiple occasions.

The agreement also includes a double contribution convention to exempt Indian temporary workers from UK social security payments during short-term assignments, addressing a key concern raised by Indian industry.

Historical Trade Ties and Post-Brexit Strategic Realignment

India and the UK share a long history of bilateral trade, but relations have gained renewed urgency after the UK’s departure from the European Union. Since Brexit, the UK has been seeking bilateral trade agreements to replace EU frameworks. India, for its part, has been pursuing a more assertive trade policy in recent years, resuming FTA talks with several partners including the EU, Canada, and Australia.

The India–UK FTA represents a strategic realignment between two economies with complementary strengths: India in manufacturing and services, and the UK in high-tech and capital-intensive industries. For the pharmaceutical sector, the deal provides a platform for India to increase its footprint in Europe through a more favourable trade channel.

Expected Timeline and Monitoring

The agreement will undergo ratification by the UK Parliament and approval by the Union Cabinet in India. Implementation is expected by mid-2026. A joint committee will be constituted to monitor the execution of the agreement, supported by sector-specific working groups, including one for pharmaceuticals and medical devices.

The Federation of Indian Export Organisations (FIEO) and Pharmexcil have called for clear implementation guidelines to ensure that exporters—especially small and medium enterprises—can take full advantage of the new trade terms.

The India–UK Free Trade Agreement represents a new development in India’s trade relations with developed economies. For the pharmaceutical and medical technology sectors, the agreement outlines provisions that may facilitate greater market access, lower tariffs, and regulatory engagement. The actual impact of the agreement will depend on its implementation and how industry stakeholders in both countries respond to the changes.