How India-UK trade agreement will boost IT, electronics sectors
What's the story
The recently signed Free Trade Agreement (FTA) between India and the UK is set to bring major benefits for the IT and electronics sectors. The deal gives a three-year exemption from social security payments for Indian professionals working temporarily in the UK. The move will benefit around 75,000 Indian workers and over 900 employers, primarily from the IT sector.
Cost-saving measure
Major cost savings for IT giants
The exemption under the double contribution convention (DCC) will be a major cost-saving measure for IT giants such as Tata Consultancy Services (TCS) and Infosys. It removes the long-standing burden of dual contributions, enabling more flexible deployment of talent to on-site UK projects. This is especially beneficial for India's $283-billion IT industry, which exports 17% of its services to the UK market.
Export growth
Electronics exports to UK expected to surge
The FTA also provides a major boost to Indian electronics exports. Under the deal, products such as smartphones, optical fiber cables, and inverters will now enter the UK market duty-free. This zero-duty access is expected to accelerate shipments and strengthen India's presence in a high-value tech-savvy market. Industry officials expect these tariff cuts will significantly increase the competitiveness of Indian electronics and pave the way for deeper trade linkages in advanced hardware sectors.
Strategic advantage
India positioned more competitively in global supply chain
From a strategic perspective, the FTA not only offers immediate fiscal benefits for IT and electronics firms but also positions India more competitively in the global supply chain, especially in tech-driven sectors. As services and goods flow more freely across borders, the India-UK pact marks a key shift in trade dynamics. It gives Indian companies a dual advantage of reduced costs of doing business in the UK and expanded market access for high-value exports.
Industry response
Leading electronics industry bodies have welcomed the deal
Leading electronics industry bodies have welcomed the India-UK FTA as a major step forward. The Manufacturers Association for Information Technology (MAIT) said the deal will enhance market access for IT services, boost exports, mobilize talent, and allow greater UK investment in Indian Global Capability Centers (GCCs). MAIT also highlighted that India's services exports to the UK were estimated at $19.8 billion in 2023.
New initiative
DCC from the UK is a game-changer
MAIT described the potential for a Digital Collaboration Corridor (DCC) from the UK as "a game-changer" for cost-effective talent and business mobility between both countries. The investment in GCCs also provides an opportunity for UK companies to view India as a strategic partner for research and development, analytics, cybersecurity, and emerging tech solutions. MAIT reported that India already has over 1,700 GCCs employing over 1.9 million people.