INDIA-U.K. GOODS TRADE SURGED 60%

GS-3: Indian Economy

Key Highlights

• India-U.K. total trade reached $19.3 billion in 2024-25, a 60% increase from $12.2 billion in 2016-17.
• Exports grew 41% to $12 billion, while imports nearly doubled to $7.3 billion.
• Top export categories: Electrical machinery (15.3%), Nuclear reactors/boilers (11.6%), Mineral fuels (9.1%), Pearls/stones (7%), Pharma (5.4%).
• Top import categories: Precious stones (30.5%), Boilers/N-reactors (17.4%), Electrical machinery (7.2%), Iron/steel (5%), Aluminium (4.5%).
• Engineering exports are projected to reach $7.55 billion by 2029-30 post-FTA.

Detailed Insights

• Trade Imbalance: Exports are growing, but faster import growth reduced India’s trade surplus with the U.K. from $4.9 billion (2016-17) to $4.7 billion (2024-25).
• FTA Influence: The recent Free Trade Agreement is expected to:
  • Boost engineering exports.
  • Improve market access.
  • Enhance supply chain integration.
• Sectoral Concentration:
  • 65% of imports and nearly 50% of exports are concentrated in five product categories.
  • Indicates limited diversification in the trade basket.
• India’s Positioning: The U.K. is now India’s 6th largest engineering export destination, with further growth expected.

Scientific/Technical Concepts Involved

• Free Trade Agreement (FTA): An agreement reducing tariff and non-tariff barriers to boost bilateral trade.
• Trade Surplus/Deficit: The difference between exports and imports; a positive value indicates a surplus.
• Product Concentration Ratio: The share of total trade dominated by a few product categories, affecting trade resilience.

Significance

• Reflects growing India-U.K. economic integration post-Brexit.
• Highlights export opportunities in high-tech and engineering sectors.
• Points to vulnerabilities due to import reliance on critical goods like minerals and electronics.
• The FTA is expected to drive growth, particularly in MSME-driven sectors like engineering goods.