UK–India FTA sets stage for cross-border leasing growth

Yahoo

4 days ago

The UK–India free trade agreement, signed on 6 May after three years of negotiation, lowers trade barriers across a wide range of goods and services. With India projected to become the world's third-largest economy by 2028, UK leasing providers are positioning themselves to finance bilateral trade flows and support small businesses navigating new export and import opportunities.
To great fanfare, on May 6, the world's fourth and sixth-largest economies finally signed a free trade agreement (FTA) that was three years in the making. The FTA strengthens a strategic partnership with India, with particular significance in a post-Brexit, conflict-riven world of increased trade protectionism railroaded by the US Trump administration.
India is an enticing market that is growing rapidly by around 6-7% per annum in real terms, putting it on course to become the third-largest economy in the world by 2028, according to the UK's Department for Business and Trade. By 2030, India's middle class will number an estimated 60 million, and rising, potentially reaching a quarter of a billion by 2050.
Official statistics indicate that the UK exported £17.1 billion of goods and services to India in 2024, including goods worth £7 billion, and services amounting to £10.1 billion. The UK in turn imported £25.5 billion from India (£10.8 billion of goods and £14.7 billion of services). India accounted for 2% of all UK exports in 2024, and it was the UK's 12th largest export market. Meanwhile, India was the 11th largest source of UK imports, accounting for 2.8% of the total.
India's overall demand for imports is projected to grow by 144% in real terms between 2021 and 2035, to reach £1.4 trillion, according to the government. The FTA thus represents an ambitious and comprehensive deal that, over the long run (by 2040), is expected to increase the UK's GDP by £4.8 billion, and the UK's wages by £2.2 billion each year, with bilateral trade rising by £25.5 billion each year.
The deal represents a significant opportunity for Swoop Funding, a UK-based fintech platform serving SMEs, which has been growing since its launch in 2018 by Andrea Reynolds and Ciaran Burke and has significant global reach. The FTA is 'a promising move,' says Dave Cummings, the firm's head of vendor & asset finance, who notes the fact that India is a massive and fast-growing economy, so 'anything that makes it easier for UK businesses to trade, invest, or expand there is a win.'
The Swoop team is preparing to assist UK firms in financing Indian equipment purchases through leasing and asset finance products, while supporting exporters with trade and working capital. 'We are well placed to support Indian businesses accessing UK suppliers and partners,' says Cummings, 'and we are exploring partnerships in the region to build on this momentum.'
It will not have gone unnoticed that a recent International Business Report from Grant Thornton indicated that 42% of UK businesses surveyed without an existing presence in India plan to build one in the next two years. Moreover, of those with an existing presence in the Indian market, 96% plan to expand further. Some 72% of UK businesses surveyed say that an FTA would encourage them to explore the opportunities the country offers.
Cummings believes that will bolster the asset financing sector, sparking fresh demand from UK firms looking to lease equipment for new export opportunities, or from those tapping into more affordable machinery coming from India. He expects to see demand increasing across several areas, with working capital, trade finance and, crucially, asset finance bolstered, as firms gear up to take advantage of the new opportunities the FTA offers. 'It is one of those deals that, if backed up by practical support, could really shift the dial for small- and medium-sized enterprises,' he says.
The FTA plans to lower import tariffs on key products, with reductions on 90% of tariff lines for UK exports, to eventually make 85% fully tariff free within a decade. The deal includes aerospace, electrical machinery, electrical circuits and conductors, and food items, among the various sectors and products covered, with automotive tariffs of more than 100% lowered to 10% under a new quota arrangement. The UK will eliminate tariffs on 99% of Indian goods; among these are a range of manufactured products.
Invariably, the British Chambers of Commerce welcomes the move, with the tariff reductions 'giving UK companies exporting to India a clear edge on increasing sales,' says William Bain, head of trade policy, who adds that 'the proposals for a follow-up Investment Treaty will also provide a solid platform to grow manufacturing and other sectors in our two economies.'
There are new digital commitments to support electronic contracts and transactions, including support for SMEs to make it easier to enter the market. India has also agreed to release UK goods quickly at its customs points, provide a streamlined portal for trade, and publish all customs procedures and laws online in English. For the first time, UK businesses will be able to access the Indian procurement market worth more than £38 billion per annum.
The automotive, construction, logistics and renewables sectors are likely to benefit, says Cummings, especially where firms need to upgrade or replace equipment, with a wave of competitively priced Indian machinery entering the UK market. That represents an opportunity, of course, to finance providers, 'helping customers acquire this new equipment through leasing, hire purchase, or other flexible arrangements,' while underlining the fact that 'It is also a chance to finance deals at both ends of the trade corridor.'
Cummings sees the planned reduction in Indian import tariffs on UK vehicles and machinery as a big plus. 'It opens the door for leasing firms here to serve the growing Indian demand for high-quality kit.' Still, from a leasing standpoint, he says there is still a gap. More clarity on trade finance support, customs processes, and how smaller firms can access affordable cross-border finance would have been ideal. 'It's often these practical details that make or break a deal's impact for SMEs,' he says.
'We'd also like to see more accessible government-backed finance options, better awareness campaigns, and hands-on support to help businesses navigate red tape.' Without that, he says, the benefits of the deal risk being confined to bigger players.
"UK–India FTA sets stage for cross-border leasing growth" was originally created and published by Leasing Life, a GlobalData owned brand.
The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.