The India-UK Free Trade Agreement could reshape pharmaceutical exports and strengthen India’s contract drug manufacturing industry through duty-free access and expanded collaboration.
The newly signed Free Trade Agreement (FTA) between India and the United Kingdom is being viewed as a major step forward for India’s pharmaceutical export landscape. Formalised in the presence of top government representatives including Prime Minister Narendra Modi and UK Prime Minister Keir Starmer, the deal titled the Comprehensive Economic and Trade Agreement targets a bilateral trade boost from $56 billion to $120 billion by 2030.
According to The Economic Times, Industry voices, including the Pharmaceuticals Export Promotion Council of India (Pharmexcil), have welcomed the agreement, particularly for its provisions related to the pharma sector. Namit Joshi, Chairman of Pharmexcil, noted that the pact could help drug manufacturers improve cost efficiencies and expand their global reach, particularly in bulk drug exports and Contract Development and Manufacturing Organisations (CDMO) services.
For the pharma sector, the inclusion of a “zero import duty” clause on key inputs like Active Pharmaceutical Ingredients (APIs), bulk drugs, and finished formulations is expected to ease operational costs. Many Indian generic manufacturers, who typically operate on narrow profit margins, stand to benefit from these provisions. As per the Ministry of Commerce and Industry, Indian goods – including pharmaceutical products – will now have zero-duty access on 99 per cent of tariff lines, which represent nearly the entire trade value.
India exported approximately $914 million worth of APIs and formulations to the UK in FY24. With this FTA in effect, this figure could see significant upward movement, particularly in segments like complex generics, biosimilars, and specialty formulations. The trade pact is also expected to promote collaborative research initiatives and increase the scope for Indian CDMO players to participate in global clinical and commercial drug development workflows.
Previously, Indian pharmaceutical exports to the UK attracted duties ranging between 5 and 10 per cent, while the UK imposed a 6 per cent tariff on API imports and kept finished drugs largely duty-free. With the new agreement, these differences are expected to be resolved in favour of improved trade fluidity. The UK’s existing tariff system, known as the UK Global Tariff (UKGT), will now adjust to accommodate the updated FTA clauses for Indian imports.
In the UK, the pharmaceutical procurement system functions under the state-run National Health Service (NHS), which provides healthcare access to all legal residents. Drugs are procured through a centralised government-funded model, making cost-effective imports particularly attractive. This could offer Indian manufacturers an edge in supplying affordable generics and biosimilars at scale.
However, not all aspects of the FTA have been finalised. Intellectual property (IP) clauses remain under discussion, as they have historically been a point of divergence. While UK negotiators have pushed for stronger IP protections, Indian stakeholders and patient advocacy groups have expressed concerns over access and affordability. The final wording on these issues could influence future innovation, pricing, and availability of new therapies across both markets.
As implementation begins, the FTA is expected to shape a more integrated pharma trade framework between India and the UK, offering mutual opportunities in manufacturing, research, and supply chain resilience.
