The India-UK Free Trade Agreement (FTA) signed recently does more than improve trade equations. Systematisation of the trade system augurs well for the agricultural and agrochemical sectors. The structuring of the system is certain to influence supply chains, iron out regulatory friction and even improve competitiveness among key players across regions. The FTA does more – it is a template for rebalancing global agrochemical flows amidst shifting geopolitical realignment.

Reorientation of agrochemical trade routes

The agrochemicals space in both countries has unique advantages. While India exports agrochemicals worth approximately $5.5 billion annually, the UK accounts for less than 2 per cent of this volume (FICCI, 2023). The FTA could also be leveraged by British enterprises to leverage India’s vast domestic market—valued at over $6.9 billion in FY24 (ICRA)—to export high-end pre-emergent and bio-stimulant formulations, particularly in the emerging sustainable agriculture segment.

The FTA opens a new trajectory for Indian firms seeking access to the UK’s $2.8 billion agrochemical market—dominated by multinationals with Eurocentric supply chains. The bilateral movement will likely foster product innovation tailored to tropical and temperate agro-climatic zones alike.

At a broader level, the FTA not only betters trade between the two countries but also unlocks trade barriers for enterprises to access the wider European Union. India is already well positioned to manufacture generics and off-patent molecules at scale. But a zero-duty or reduced-duty regime allows Indian firms to re-route certain supply lines via the UK for onward processing and distribution. This means significant cost arbitrage and lower regulatory barriers compared to the more stringent EU REACH standards.

Regulatory harmonisation

Divergence in maximum residue limits (MRLs) and active ingredient approvals between the two countries has posed a perennial challenge. For context, India, approved 270 pesticide molecules last year, while the UK, aligning with EU precautionary principles, permitted less than 170 (DEFRA, 2024) notifications. Such disparities percolate into trade rejections - the EU alone flagging 221 consignments from India (data from the RASFF portal as of the last 3 years). The FTA does not specify regulatory convergence, but it does open doors for mutual recognition agreements (MRAs) to fast-track dossier reviews.

Citing fears, some sections of the British media have espoused concerns. There is fear that imports from India may bypass rigorous safety benchmarks. While concerns are welcome, the industry has always batted for a transparent, science-led approach to harmonisation—anchored not in lowest-common-denominator policies but one rooted in risk-assessment protocols.

From a multilateral standpoint, the FTA positions India as a potential launchpad for the UK to regain influence in the Indo-Pacific—a region expected to drive 35 per cent of the global agrochemical demand growth over the next decade (FAO, 2024). Simultaneously, Indian firms could use the UK as a regulatory springboard to tap into markets in Latin America where British regulatory norms hold sway.

Building supply chain resilience

Be it finance or EXIM, the adage on never to keep all your eggs in one basket has always been crucial. Nearly 60 per cent of technical-grade active ingredients used in Indian agrochemicals are currently imported from China (DPIIT, 2023). The India-UK FTA could be instrumental in catalysing the reconfiguration of fragile supply chains.

The agreement disrupts existing bloc dynamics where agrochemical trade has largely been channeled through US-EU corridors. It signals a shift toward minilateral trade cooperation and alliances built on shared technical capabilities. To Indian and British firms alike, this unlocks new tri-lateral partnerships, especially in emerging markets where both countries enjoy significant soft-power and historical trade ties.

This is particularly relevant in the wake of export restrictions on certain Chinese intermediates due to geopolitical tensions and even environmental clampdowns. Furthermore, the UK government’s push for reshoring critical supply chains post-COVID dovetails with India’s Production-Linked Incentive (PLI) schemes for agrochemical manufacturing. Companies that align their capex cycles with this bilateral momentum can establish dual-continent synthesis footprints to serve global demand with built-in geopolitical hedging.

The India-UK FTA is more than just a transactional deal. By enabling strategic diversification, regulatory re-alignment and supply chain derisking at a time of global uncertainty, the FTA serves as a structural inflection point for the global agrochemical industry. For companies that can read the signal beneath the noise, the FTA offers a chance to rebuild legacy value chains, enter new geographies, and align with the evolving regulatory calculus of a multipolar world.

The author is Chairman, Safex Chemicals

Published on June 15, 2025