Two sweeping financial changes hit UK shoppers on Wednesday, as a landmark India-UK free trade agreement and new buy now, pay later (BNPL) protections both came into force.
The trade deal – described by the British government as “the UK’s biggest and most economically significant bilateral trade pact” since leaving the EU – removes or reduces tariffs on 99% of Indian exports to the UK and 90% of UK imports into India. It is expected to increase UK GDP by 0.13%, equivalent to £4.8bn, and India’s by 0.06%, or £5.1bn per year in the long run.
“India-UK trade deal and new BNPL protections take effect, cutting tariffs and regulating credit.”
Indian home textile giant Welspun Living, which makes championship towels for Wimbledon, immediately expects to benefit. CEO Dipali Goenka told the BBC: “I’m expecting our exports to the UK to now grow in double digits.” She noted that India had been at a disadvantage because Bangladesh and Pakistan entered the UK duty-free through the Developing Countries Trading Scheme, while India paid 12% tariffs. “If you look at just home textiles, Pakistan’s share of UK exports are at around 55%, whereas India’s is just 6-7%. That’s the gap we can finally cover,” she said.
For British alcohol companies, the pact reduces customs duties on Scotch whisky from 150% to 75% immediately, then gradually to 40% over 10 years. Avneet Singh of Delhi import house Modern Drinks Pvt Ltd called it a “real shift, not a small tweak”, adding that his firm has been working closely with UK suppliers to ensure shipments can benefit from day one.
Separately, millions of shoppers gained more rights as the Treasury ended the buy now, pay later “wild west”. BNPL is now regulated by the Financial Conduct Authority (FCA), giving it protections in line with credit cards and personal loans. Lenders must carry out affordability checks – a major change for a sector whose value jumped from £60m in 2017 to more than £13bn in 2024, according to the FCA. BNPL is now used by 25% of UK adults, with Klarna, Clearpay and PayPal dominating.
The Treasury said the new regime would deliver a “fairer deal” for shoppers. Organisations such as Citizens Advice have said they are helping “more people than ever before” with BNPL-related problems – problems that often stem from missed payments hitting credit files and incurring late fees. Whether the new safeguards are enough to curb the temptation of interest-free instalments remains to be seen.