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On May 6, 2025, India and the United Kingdom finalised a landmark Free Trade Agreement, marking a significant milestone in bilateral economic relations. This agreement aims to double current trade in goods and services from $60 billion to $120 billion by 2030, fostering economic cooperation, dismantling trade barriers, and stimulating investment and job creation in both countries.
Why the UK-India FTA Was Needed in the First Place
Before this historic agreement, trade between the UK and India faced several challenges:
- High Tariff Barriers: UK exports like cars and spirits faced prohibitively high import duties in India – over 100% for automobiles and up to 150% for Scotch whisky. The FTA now aims to slash these rates, with whisky tariffs dropping to 75% immediately and eventually to 40% over the next decade, unlocking greater market access for premium UK goods.
- Regulatory and Non-Tariff Barriers: Complex compliance requirements led to delays and increased costs, particularly in sectors like food, pharmaceuticals, and consumer goods.
- Limited Market Access: UK firms encountered restrictions in entering India’s legal, financial, and education services sectors. For instance, the legal services market remains largely closed to foreign firms.
- Investment Protection and Dispute Resolution Gaps: The absence of robust mechanisms for investor protection and dispute resolution created hesitancy among businesses considering long-term investments.
- Trade Imbalance and Post-Brexit Realignment: The UK sought to diversify its trade partnerships post-Brexit, reducing reliance on the EU. India aimed to boost exports and access advanced technology and capital from Western markets.
- Fragmented and Costly Cross-Border Payment Systems: Small and medium-sized enterprises faced challenges with cross-border payments, including high fees, currency conversion issues, and regulatory complexities, hindering their ability to engage in international trade effectively.
99% Tariff-Free, 100% Opportunity – What the FTA Really Delivers
For Indian Exporters
Imagine a textile manufacturer in Tirupur, Tamil Nadu, exporting garments to the UK. Before the FTA, tariffs and duties made their products less competitive compared to those from Bangladesh or Vietnam, who enjoyed preferential trade access.
Now, with tariffs eliminated on 99% of Indian export lines – covering nearly £10 billion worth of goods – that same manufacturer can price their products more competitively and win larger orders.
This tariff relief isn’t limited to textiles. It extends across sectors like:
- Marine products from Kerala’s coastal communities
- Leather and footwear makers in Agra
- Gems and jewellery exporters in Surat
- Manufacturers of toys, sports goods, auto parts, organic chemicals, and engineering products across the country
These sectors make up over 40% of India’s MSME exports, and the FTA levels the playing field, allowing Indian exporters to finally compete equally with Bangladesh and Vietnam – countries that previously benefited from special UK trade programs.
For UK Exporters
Consider a UK-based producer of premium Scotch whisky. Before the FTA, steep tariffs of up to 150% limited their ability to compete effectively in India’s market. With India committed to reducing tariffs on 90% of UK export lines, and 64% becoming tariff-free immediately (rising to 85% over the next 10 years), that whisky can be priced more competitively, unlocking a vast new customer base.
But tariff reductions are only part of the story.
India’s fast-growing middle class and rising demand for premium imported goods create a natural growth environment for UK exporters across several strategic sectors, including:
- Beverages, especially alcoholic spirits like Scotch whisky
- Advanced manufacturing components
- Automotive parts
- Medical and diagnostic equipment
These sectors are primed to benefit from easier market entry and growing consumer demand.
To top it off, the FTA includes customs simplification measures, allowing eligible traders faster goods release and less cumbersome documentation. This speeds up delivery times, reduces logistics costs, and helps exporters respond quickly to market shifts, which is especially valuable for businesses with recurring shipments.
The Hidden Bottleneck: Cross-Border Payments
Even with the UK–India FTA unlocking tariff-free access and smoother trade processes, one critical friction point remains: getting paid across borders, reliably and affordably.
Here’s how this bottleneck shows up for exporters on both sides:
For Indian Exporters Selling to the UK
- High FX Markups & Hidden Charges: Traditional international payments often involve 2–5% markup on FX rates, plus wire transfer fees, which reduce net earnings.
- Slow Settlement Cycles: Exporters frequently wait 3–7 days to receive funds from the UK, impacting cash flow and working capital.
- No Access to Local UK Payment Methods: UK buyers expect to pay using local cards, wallets, or direct bank transfers. Many Indian exporters struggle to offer these, leading to drop-offs at checkout.
- Compliance Hurdles & Documentation Pain: Dealing with RBI guidelines, invoices, FIRC requirements, and reconciliation across platforms increases back-office load, especially for MSMEs.
- Limited Automation: Manual reconciliation, invoicing, and payment tracking make it hard to scale efficiently.
For UK Exporters Selling to India
- Lack of UPI, Netbanking & Wallet Support: Over 80% of digital transactions in India happen via UPI. UK businesses that rely only on cards or bank transfers miss out on a massive conversion opportunity.
- Currency Conversion Complexity: Receiving INR and converting to GBP can involve non-transparent FX rates and reconciliation delays.
- High Transaction Costs: Traditional PSPs and banks charge hefty cross-border fees, which make small-ticket B2C exports unviable.
- Regulatory Unfamiliarity: Many UK firms are unfamiliar with Indian consumer payment preferences, data laws, and banking partner requirements, causing friction during onboarding.
- Fragmented Checkout Experience: If local Indian buyers face a poor payment experience (slow page load, no UPI, etc.), they drop off, regardless of product quality.
The FTA removes policy barriers. But to truly scale, exporters need payment rails that are fast, local, transparent, and regulation-ready on both sides.
The Seamless Solution: Modern Cross-Border Payment Infrastructure
The UK–India FTA removes policy hurdles. But without the right payment infrastructure, exporters risk facing friction that slows growth.
Cross-border commerce today is not just about moving goods; it’s about getting paid quickly, locally, and compliantly. Exporters on both sides need modern rails that match the speed of global trade.
What Exporters Need to Trade at Full Potential
- Local Currency Collection: Indian exporters should be able to collect payments in GBP or EUR. UK exporters should be able to accept INR directly. Eliminating currency mismatch at the point of payment increases buyer comfort and boosts conversion rates.
- Local Payment Method Support: The ability to offer preferred payment modes is non-negotiable. In India, that means UPI, netbanking, and cards. In the UK, that includes local debit cards and bank transfers. Exporters can no longer afford to lose business at the checkout stage.
- Transparent FX, No Hidden Charges: Exporters need real-time exchange rates and cost visibility. Legacy systems often bundle fees or inflate FX spreads, making it hard to forecast margins.
- Fast and Predictable Settlement Cycles: Waiting 3–7 days to receive funds is no longer acceptable. Modern systems offer quick settlement, enabling better cash flow management and reinvestment cycles.
- Built-In Compliance for Cross-Border Trade: From auto-generating FIRCs and handling RBI regulations to supporting HMRC visibility in the UK, exporters need tools that reduce back-office strain while staying fully compliant.
The FTA creates opportunity. Modern payment infrastructure ensures you can scale it.
How Cashfree Payments Makes the FTA Work for You
The UK–India FTA has cleared the policy runway. But to truly capitalise on the opportunity, exporters need a payment partner that can simplify collections, boost conversions, and remove the traditional cross-border drag.
That’s precisely what Cashfree Payments is built for.
For Global Businesses Selling in India
India is now a $100B+ digital consumer economy – one of the fastest-growing markets for SaaS, D2C, and digital services. But entering the market has historically meant long compliance cycles and the burden of setting up a local entity.
Cashfree solves that.
- Go Live Without a Local Entity: No Indian business registration or bank account needed – just integrate and start collecting in days.
- Accept UPI, RuPay, and Bank Transfers: Offer India’s most preferred, mobile-first payment modes – built for conversion.
- Settle in Your Home Currency: Get payouts in USD, EUR, GBP or more, straight to your overseas bank account.
- Smarter Reconciliation: Access real-time dashboards and clear settlement views that simplify accounting.
- Flexible Integrations: Choose developer-friendly APIs or no-code checkout options to suit your stack.
Whether you’re a UK-based SaaS company, marketplace, or payment aggregator, Cashfree makes you India-ready in a fraction of the usual time.
For Indian Exporters Selling Globally
If you’re an Indian business eyeing global growth, Cashfree helps you turn that demand into revenue, minus the cross-border complexity.
- Accept Payments in 140+ Currencies: From global cards to PayPal and international bank transfers.
- Settle in Foreign Currency: Route earnings into your EEFC account to avoid unnecessary FX losses.
- High Success Rates: >80% success on global card payments thanks to intelligent routing and secure flows.
- RBI-Compliant by Design: Aligned with the PA-CB framework, your collections are fully export-ready.
- Instant FIRCs: Automatically generate FIRC reports for documentation and compliance, without delays.
If you sell frequently to customers in key markets like the US, UK, or EU, Cashfree’s Multi-Currency Accounts let you collect like a local without setting up a local bank account.
Cross-border trade is no longer just about logistics. It’s about payments, speed, and confidence.
Cashfree Payments is how Indian and UK exporters can turn the FTA’s promise into tangible, scalable business outcomes.
Talk to us to explore how we can help you go global – or go live in India – faster.
