The Free Trade Agreement signed between India and the United Kingdom, hailed as an “ambitious and mutually beneficial Free Trade Agreement” by the Prime Minister Narendra Modi on X, has excited and concerned India's economic stakeholders equally. The government asserts that this trade pact has the potential to be a game changer for the MSME sector—one that contributes approximately 30% of India’s GDP and employs over 110 million people.

Despite resistance from farmer unions under the Samyukt Kisan Morcha (SKM), the government Farmer organizations have staged protests against the three-and-half years impending negotiation concluded with signing of the historical agreement.

Navigating Opportunities in Liberalized Trade Landscape

Praised by the Union Minister Piyush Goyal, as "forward-looking”, the India-UK Free Trade Agreement (FTA)  has significant opportunities for Indian MSMEs in the UK markets. Reduced tariffs and open market access would particularly benefit MSMEs engaged in export-oriented manufacturing, food processing and agritech. Moreover, the FTA will help the India MSMs operating in SaaS, fintech, and IT-enabled services to capitalize on the UK’s openness.

The biscuits, spices, and condiments can turn the UK’s multicultural consumer base demand to their account, establishing their international presence.

Building Smarter MSMEs for Global Markets

The technology transfer and joint ventures encouraged under the FTA, will offer a strategic avenue for Indian MSMEs to collaborate with UK firms. Through such collaborations, Indian enterprises can incorporate advanced manufacturing processes and enhance quality standards and innovation ecosystems.

Commitments to improve intellectual property protections and streamline customs procedures to reduce bureaucratic delays are made under the FTA. This  can ensure smoother logistics for exporters.

Mitigating Concerns 

However, not all stakeholders are on board. Signing of the India-UK Free Trade Agreement (FTA) has concerned some. Farmers have argued the agreement may expose India’s agriculture sector and traditional MSMEs to stiff competition from well-capitalized UK firms. Citing endangers the livelihood of farmers and a potential threat to India’s MSMEs, Samyukt Kisan Morcha (SKM), the umbrella body of over 40 farmer unions, has initiated a nationwide protest.

Agriculture MSMEs and other food processing sectors has been relinquished by the government to compete in the global markets as per the farmers believe.

To  address these concerns, providing targeted financial aid to support MSMEs amid global competition would  call  for an inclusive policy support. Subsidies, tax breaks, and export incentives and government-led skill development in areas like quality control and e-commerce; and investment in logistics and infrastructure to bolster the local supply chains can be instrumental.

Post-Tariffs Diversification 

This India-UK trade agreement marks a strategic move from two strong economies, to diversify trade ties post-U.S. tariff tensions. With the right policy mix, the agreement can be a vital tool to globalize Indian MSMEs, enhance innovation, and create resilient supply chains—without marginalizing local producers.

The free trade agreement with the United Kingdom can also be seen as an attempt by the Indian government to explore other market options during the 90-day pause following the tariffs policy announced by the Trump  administration.