India-UK Trade Surges 15.2% to £47.2 Billion, Services Deficit and FDI Asymmetry Highlight Key Policy Focus
SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure
Institutions: Ministry of Commerce and Industry (MoCI) | Department for Promotion of Industry and Internal Trade (DPIIT)
The UK Department for Business & Trade’s factsheet reports that total trade in goods and services between the UK and India reached £47.2 billion in the twelve months leading up to the end of Q2 2025, marking a robust year-on-year growth of 15.2% (£6.2 billion). India was the UK’s 10th largest trading partner.
The overall UK trade deficit stands at £9.7 billion, with the imbalance now primarily services-driven (£5.1 billion deficit). The bilateral trade is services-led, with services dominating both sides: UK services exports (India’s import) grew 20.0% to £12.1 billion (led by Travel at £7.8 billion) , while India’s services exports (UK’s import) grew 18.0% to £17.2 billion (led overwhelmingly by Other Business Services at £11.3 billion).
On the investment front (end of 2023 data), a stark asymmetry is visible: India’s Foreign Direct Investment (FDI) into the UK surged by 22.2% to £12.4 billion, while UK outward FDI stock in India decreased by 12.9% to £17.5 billion. This context is set against India’s strong economic outlook, with real GDP growth projected at 6.6% in 2025 and a global GDP ranking forecasted to rise to 4th by 2026.
Distribution of Trade Deficit between Goods and Services
The UK’s total trade deficit of £9.7 billion is now almost evenly split, with a deficit of £4.6 billion in goods and a deficit of £5.1 billion in services. This balance highlights that the imbalance is no longer merely a manufacturing issue but is significantly influenced by services trade, particularly due to higher UK-originating Travel exports and lower UK-originating Telecommunication/Computer exports compared to India’s dominant position in Other Business Services.
Policy Relevance
The massive disparity in FDI trends—India’s investment into the UK booming by 22.2% despite UK investment into India falling by 12.9%—requires urgent policy attention to balance the partnership and ensure the continued UK participation necessary for India’s high growth goals. Maximizing gains from the core services sector demands accelerating mutual recognition of professional qualifications, given the high share of Other Business Services in Indian exports.
Follow the full report here: Trade and Investment Between the UK and India