Dhaka: The Free Trade Agreement (FTA) between India and the UK is set to come into effect on July 15. Both nations signed the agreement in July last year following nearly three years of negotiations. Once the agreement is implemented, India stands to gain a significant tariff advantage over two key neighbors—Bangladesh and Pakistan—in export categories such as textiles and processed food.
According to reports, Bangladesh could lose competitiveness in 6 percent of its exports to the UK. Similarly, Pakistan could see its export basket lose competitiveness in 2 percent of its volume due to Indian goods receiving market preference.
Any impact on ASEAN nations?
The agreement will have a limited impact on ASEAN economies, as only 1 percent of their exports are at risk due to the tariff benefits India will receive. This analysis focuses on product categories where India’s exports to the UK exceeded $1 million in 2025.
Indian exports were either at least 50 percent higher than those of competing nations or not more than 30 percent lower, indicating a strong competitive overlap. Among the countries analyzed, Vietnam has the highest exports to the UK ($12.85 billion), followed by Thailand ($6.53 billion) and Bangladesh ($5.07 billion).
What will be the impact on Bangladesh?
In 2025, India’s exports to the UK stood at $15.17 billion, providing a solid foundation for expansion under the FTA. This figure highlights the trade volume India could potentially capture thanks to tariff advantages. Bangladesh is likely to face the greatest impact, as its exports worth $298.2 million could be affected. It is followed by Vietnam ($160.8 million), Thailand ($40.3 million), Pakistan ($38.5 million), and Indonesia ($35.4 million).
This indicates that the most intense competitive pressure will fall on economies that compete with India in labor-intensive manufacturing and food exports.
Why are Textiles and Rice at the Core of Competition?
Sectors likely to be most affected include textiles, processed food, rice, pharmaceuticals, chemicals, plastics, and consumer goods. These are categories where India already holds a significant presence in the UK market.
Textiles represent the area of greatest pressure for Bangladesh. Rice is another major category; India exported rice worth $94.5 million—far exceeding Pakistan’s $34.7 million and Thailand’s $36.4 million. Data shows that India already dominates rice exports to the UK and is well-positioned to further strengthen this lead.
What about the Shifting Competitive Landscape in Asia?
This analysis reveals that the India-UK FTA does more than just boost trade between the two nations; it alters the competitive landscape across Asia. For countries like Bangladesh and Pakistan, the agreement could intensify pressure on the very sectors that have traditionally driven their export growth.
