UK-India Free Trade Agreement: 6 potential benefits for e-commerce sellers

The UK-India Free Trade Agreement (FTA), signed in May 2025, has been celebrated by the UK government as a ‘landmark deal’ and ‘huge economic win’.  

In a world currently getting to grips with Trump’s protectionist tariffs, the deal could significantly impact e-commerce between the UK and India by reducing trade barriers and opening up new opportunities for digital and physical goods.

Here’s how six ways the FTA could influence the e-commerce landscape: 

1. Lower tariffs on goods 

The UK will eliminate tariffs on 99% of goods, while India will cut duties on 90%, with 85% becoming duty-free within a decade. 

This means lower costs for cross-border e-commerce, especially in sectors like fashion, electronics, cosmetics, and food products, which are popular in online retail. 

2. Boost for SMEs and digital sellers 

The deal is expected to benefit small and medium-sized enterprises (SMEs) by simplifying access to each other’s markets. Indian sellers on platforms like Amazon and Flipkart could find it easier and more profitable to export to the UK, while UK-based SMEs could tap into India’s rapidly growing online consumer base.

3. Improved logistics and supply chains 

With reduced tariffs and streamlined customs procedures, shipping times and costs may decrease, making cross-border e-commerce more efficient. This could encourage more UK-based e-commerce platforms to source from or sell to India, and vice versa. 

4. Digital trade and data flow provisions 

The full text of the FTA hasn’t been released, but modern trade deals often include provisions on digital trade – such as data localisation, cybersecurity, and cross-border data flows. 

If that’s the case here, those provisions could enhance trust and ease of doing business for digital platforms operating in both countries. 

5. Consumer benefits 

UK consumers may see greater variety and lower prices on Indian goods like textiles, jewellery, and food products – and Indian consumers could gain better access to UK brands and products, especially in luxury and lifestyle segments. 

UK v India: comparing the e-commerce markets 

With a market worth almost USD $342 billion, the UK already has high internet penetration (around 85%), an existing mobile commerce infrastructure, and strong consumer demand in fashion, electronics, and groceries.  

Meanwhile, India, worth around USD $137 billion, is seeing rapid urbanisation, increasing digital penetration, smartphone adoption and digital payments (e.g., UPI). Both markets are projected to grow by almost 22% by the end of the decade. 

India’s growth is also supported by government-backed platforms like ONDC (Open Network for Digital Commerce). The ONDC is a network that works across all marketplaces, rather than a marketplace itself – and could help smooth the way to easier cross-border trade.  

Which e-commerce sectors might see the most uplift thanks to this deal? 

• Textiles & clothing: With 99% of Indian exports to the UK to be duty-free, cross-border fashion e-commerce may see a boost 
• Jewellery: Indian jewellers gain easier access to UK consumers; UK luxury brands can tap into India’s growing middle class 
• Electronics & mobile accessories: The lower tariffs and faster customs clearance will benefit both Indian and UK sellers 
• Food & beverage: Great news for UK food sellers:  whisky, cheese, and lamb exports to India will see significant tariff cuts (such as whisky slashed from 150% to 75%)  
• Health & Beauty: UK-based sellers can expand into India’s booming personal care market, while Indian Ayurvedic and herbal products gain popularity in the UK

Your key takeaways

The UK-India FTA aims to boost bilateral trade, especially in digital and consumer sectors. It widens sellers’ reach in both countries, reduces costs for cross-border sales of fashion, electronics, food, and other sectors, and can make market access, logistics and sourcing easier and more affordable.

If you’re aiming to expand globally to the rest of the world from the UK, India offers a market growing at almost the same rate as the UK’s – it’s worth over a hundred billion dollars and that’s only set to grow.