India-UK FTA deals blow to Pakistan; Bangladesh also set to be alarmed

Paris: When Prime Minister Narendra Modi met his British counterpart Keir Starmer during the G7 summit in France, the same words escaped both their lips: "We did it." These were no ordinary words; they hold immense significance for the trade relations between the two nations. Both countries have prioritized and finalized a trade deal (FTA) that had been languishing on the back burner for decades. This agreement is set to come into effect on July 15, bringing substantial benefits to both India and the UK. However, while this deal is advantageous for India, neighboring Pakistan and Bangladesh are unlikely to be pleased.

This is because the agreement grants India preferential access to the British market over exports from these two countries, inevitably resulting in losses for them. Reports suggest that this India-UK deal could impact 6 percent of Bangladesh's total exports and 2 percent of Pakistan's total exports.

The trade agreement between India and the UK is no ordinary pact; rather, it serves as a testament to the fact that both nations will now prioritize each other in the trade sector. This deal is certain to provide a significant boost to India's textile and agricultural sectors. According to a Moneycontrol report, India already engages in large-scale trade with the UK. While our neighbors lag significantly behind overall, Bangladesh, Pakistan, and Thailand currently lead in textile and food exports. With this Free Trade Agreement, India is now positioned to challenge these countries' export dominance. In 2025, India exported goods worth approximately $15.17 billion to the UK; with the agreement now in place, these exports are bound to increase further.

Will Bangladesh Face the Biggest Setback?

Bangladesh has made remarkable strides in the textile sector over the past few years. Bangladeshi garments have gained popularity not only in India but also in international markets. Until now, Bangladeshi textiles enjoyed a preference over Indian garments in the UK market. However, due to the agreement, Indian textiles will now be available in the UK market at lower prices and with reduced taxes, whereas Bangladeshi textiles of similar quality will be more expensive. In terms of figures, Bangladesh exported goods worth approximately $298 million to the UK in the last fiscal year, with textiles accounting for a significant portion of this. Now that Indian textiles will be readily available, Bangladesh will have to seek out new markets for its products.

A Major Setback for Pakistan Too?

Pakistan has long been a major hub for paddy cultivation, relying on the waters of Punjab's rivers. The quality of paddy from India and Pakistan appears to be quite similar. Pakistan has held a long-standing trade agreement with the UK, which previously made Pakistani rice more easily available in the British market compared to Indian rice. Regarding the data, India exported rice worth approximately $149 million to the UK, while Pakistan's exports stood at around $43.3 million. With the UK now having signed a trade deal with India, Pakistan's $43 million export figure faces uncertainty. Furthermore, there has been ongoing competition between India and Pakistan over a specific variety of rice; India has invested approximately $94.5 million in this variety, compared to Pakistan's $34 million. India's move will undoubtedly impact Pakistan's exports in this sector as well.

Potential Setback for Other Asian Nations?

Beyond textile and rice exports, the India-UK deal could also impact trade in processed foods, pharmaceuticals, chemicals, plastics, petroleum, and other commodities. Although India already maintains a strong foothold in these product categories, other Asian nations—including Thailand, Vietnam, and Indonesia, alongside Pakistan and Bangladesh—also have a presence in the UK market. These countries rely on their own exports to maintain their market position there. India's expanding exports to the UK are bound to affect these nations.

Having earned the title of the "pharmacy of the world," India has solidified its grip on the UK's pharmaceutical industry. Furthermore, New Delhi has strengthened its presence in London regarding bakery and processed food products. In terms of figures, India exported bakery and cereal-based products worth $32.4 million to the UK, whereas Thailand’s exports stood at $29.1 million and Vietnam’s at $27.2 million—highlighting the competition India faces from other Asian nations in this sector. However, following this deal, the situation appears to be tilting in India's favor.

Thus, while this agreement between India and the UK brings relief to New Delhi, it could prove to be a major headache for other Asian nations, as they may now need to seek out new markets for themselves.