The finalisation of the UK-India Free Trade Agreement (FTA) on 7 May 2025 is being hailed as a landmark achievement in bilateral economic diplomacy, with strategic implications for air cargo connectivity and policy frameworks between the two nations. As India emerges as a pivotal export manufacturing base and the UK seeks to diversify post-Brexit trade lanes, the FTA is expected to catalyse both directional cargo flows and systemic adjustments in cross-border logistics.
According to estimates released by the UK government, the agreement is expected to increase annual bilateral trade by £25.5 billion over the long term and contribute £4.8 billion annually to UK GDP. These projections, while headline-grabbing, also underscore a more complex operational reality for air cargo professionals: rising volumes, tighter lead times, and the need for synchronised policy reforms to support trade facilitation and infrastructure.
Tariff reductions
The agreement eliminates tariffs on over 90% of UK exports to India by value, directly impacting sectors with high air freight affinity such as automotive components, medical devices, and premium consumer goods. Notably, the phased reduction of tariffs on British whisky—from 150% to 40% over 10 years—and on luxury vehicles—down from over 100% to 10%—is likely to drive greater utilisation of bellyhold capacity, especially for high-value time-definite shipments.
Conversely, the UK will grant duty-free access to 99% of Indian exports by volume, with textiles, leather goods, and jewellery expected to benefit disproportionately. India’s apparel sector alone exported nearly $5 billion to the UK in FY 2023–24, and analysts expect this figure to rise by 15–20% annually under the new regime. Given the just-in-time nature of global fashion and e-commerce logistics, much of this incremental demand is likely to flow through air cargo channels.
Implications for networks and infrastructure
To accommodate this anticipated surge, both nations will need to reassess and expand current air cargo capacities. While major gateways—such as Delhi, Mumbai, Heathrow, and East Midlands—are expected to absorb a large share of the volume, second-tier airports with airside cargo handling potential could be leveraged to decongest primary hubs.
Revisiting the UK-India bilateral air service agreement (ASA) may be essential to enable higher flight frequencies, open skies arrangements for freighters, and fifth-freedom rights for intermediate stops. These policy adjustments could allow integrators and combination carriers to optimise their networks for rising volumes on the UK-India corridor.
Further, there is a growing need to invest in cold chain infrastructure, bonded warehouse integration, and real-time cargo visibility tools—particularly at Indian airports, where legacy handling infrastructure continues to constrain turnaround times. Trade facilitation improvements such as advance customs data integration, single-window clearances, and adoption of WTO Trade Facilitation Agreement (TFA) standards will be critical
Sustainability and regulatory considerations
With the anticipated increase in cargo traffic, sustainability challenges come into sharper focus. Aviation accounts for approximately 2.5% of global CO₂ emissions, and growing air freight movements risk intensifying that share unless mitigated by proactive policy.
Air cargo operators and shippers will be under pressure to invest in lower-emission aircraft, optimise load factors, and adopt Sustainable Aviation Fuel (SAF) solutions—despite current cost premiums that exceed three times the price of conventional jet fuel. From a regulatory standpoint, convergence between EU and UK carbon market mechanisms and India’s emerging SAF policy framework could help harmonise compliance pathways.
Carbon border adjustment mechanisms (CBAM) and enhanced ESG disclosures are also likely to influence routing and carrier selection, adding another dimension to air cargo planning.
Broader policy synergies
The FTA’s rollout coincides with India’s National Logistics Policy (NLP) and Gati Shakti infrastructure push, which aim to reduce logistics costs from 13–14% of GDP to below 8% by 2030. From the UK side, the Department for Business and Trade’s push to establish the UK as a hub for digital and green trade aligns with the expected use of digitised shipping documentation, AI-driven customs screening, and standardised eAWBs for UK-India cargo.
Additionally, the agreement includes provisions on services, intellectual property, and labour standards, which could indirectly support the development of specialised air cargo services, such as life sciences logistics and cross-border e-commerce.
Modernised trade
The UK-India FTA offers more than just tariff relief; it presents a structural inflection point for cross-border air cargo. For stakeholders across airports, carriers, freight forwarders, and regulatory agencies, the agreement demands a proactive re-evaluation of capacity planning, digital integration, policy coordination, and environmental compliance.
If implemented effectively, the deal could position the UK-India corridor as one of the most dynamic east-west air cargo routes by the end of the decade. But realising that vision will depend not only on trade terms but also on strategic investment, multilateral cooperation, and adaptive policy execution across both jurisdictions.
As global supply chains recalibrate post-pandemic and amid geopolitical realignments, the UK-India FTA stands as a case study in how trade liberalisation and air logistics can be mutually reinforcing pillars of sustainable economic growth.
