MPs warn tax benefits of UK–India trade deal at risk from cuts to export support workers
Billions of pounds in potential tax savings from the UK’s landmark trade deal with India could be put at risk unless the Government rethinks plans to cut export support workers, MPs have warned, raising concerns that British businesses may struggle to turn the deal into real-world growth.
In a report published on Wednesday, the Business and Trade Committee said a deep reduction in trade support roles within government could undermine the effectiveness of the UK-India Comprehensive Economic and Trade Agreement (CETA), despite its status as the biggest bilateral trade agreement since Brexit.
The warning comes at a time when ministers are putting the agreement before Parliament for approval, which has led to an official deadline. A new analysis by the committee estimates that the initial tax savings for UK exporters to India could be worth around £400m a year, rising to £3.2bn a year over a decade as export prices rise. MPs warned, however, that these gains may not materialize if businesses are left without adequate support to navigate India’s complex administrative system and numerous non-tariff barriers.
Under this agreement, the Government expects that the agreement will raise the UK’s GDP by £4.8 billion a year by 2040 and increase international trade with India by £25.5 billion, a significant increase from the £43 billion recorded in 2024. Car exports are predicted to rise sharply, while spirits manufacturers are also expected to benefit from a major tax cut. The deal also marks the UK’s first entry into the Indian government procurement market.
Despite the magnitude of the opportunity, MPs said the practical challenges of operating in India jeopardize the deal’s impact, especially for small and medium-sized exporters. The committee urged the Ministry of Business and Trade to play an active role in its implementation, including supporting firms to implement the agreement, monitoring its uptake and intervening quickly where obstacles arise.
Concerns are being raised by plans to cut around 40 per cent of the UK trade workforce that would be tasked with helping businesses expand exports to India. Members of Parliament said this creates a serious risk to the delivery of services at the core of the Government’s growth strategy.
The Rt Hon Liam Byrne, chairman of the Business and Trade Committee, said Parliament was being asked to approve a deal that promised billions in tax savings while the resources it needed to operate were being stripped.
“This is the biggest free trade deal since Brexit, with the potential to deliver billions in tax savings for UK exporters, boosting growth and creating new jobs,” he said. “But validation is just the beginning. Ministers must now put in place a clear plan, backed by real resources, to turn access to paper into exports.”
The committee also questioned whether the agreement went far enough in terms of trade in services and the acquisition of skilled professionals, saying it still had doubts about what would be delivered in practice. In the absence of a bilateral investment agreement, MPs asked ministers to develop a realistic vision for a future agreement to open up further UK-India investment.
There were also warnings about a possible slowdown in sectors such as textiles and ceramics, which are already facing strong competition from other Indian countries. MPs reiterated earlier concerns that, without binding human rights provisions in the agreement, the Government must set clear and enforceable expectations to prevent UK businesses from being enslaved by abusive labor in overseas chains.
Industry figures advising the committee said the agreement could act as a catalyst for deeper cooperation if followed by other measures. Pankaj S Kulkarni, head of banking, financial services and insurance at Tech Mahindra, told MPs that a bilateral investment framework would be the next step needed to unlock more UK-India investment, particularly in areas such as artificial intelligence.
Mohit Joshi, chief executive officer and director of Tech Mahindra, said the agreement has the potential to accelerate growth in both economies. He said India’s talent pool and engineering capabilities, combined with the UK’s research and innovation capabilities, create a strong platform for long-term collaboration and confidence for businesses operating in both markets.
The committee concluded that while the UK–India agreement lays a solid foundation, it should be seen as a starting point rather than a finished product. Without adequate staffing, monitoring and accountability, MPs warned, the promised economic benefits of the agreement remain in the mind rather than change.
