India: Free trade agreements open opportunities

India’s ambition of becoming a leading shipping nation, supported by a massive capital injection of several billion GBP, is expected to create a significant increase in demand for the supply of goods and services within the maritime sector, particularly in shipbuilding. Combined with recent free trade agreements, Norwegian and UK businesses will have a significant advantage in offering their expertise to Indian shipyards. Shipowners may benefit from a Shipbreaking Credit Note if they choose to scrap their vessels in India and order new ones from Indian shipyards, and marine insurers will benefit from having predictable and non-discriminatory access to the increasingly vast Indian market. 

The Norwegian free trade agreement

Norway’s free trade agreement was signed on 10 March 2024 and took effect from 1 October 2025. It is part of the EFTA partnership, which includes Iceland, Liechtenstein, Norway and Switzerland, and allows for free trade for 42% of Norwegian goods. In addition to the immediate removal of some tariffs, there will be a gradual reduction in tariffs for a variety of goods and services. After ten years, approximately 92 % of Norwegian exports will be traded tariff free. 

Another key part of the agreement is the establishment of an EFTA Business Support Desk in India, intended,among other things, to serve as a ”central point of contact for businesses looking to expand into India, addressing investor concerns and resolving any issues they may face, providing support and guidance on expansion into new markets and maintaining a comprehensive database of investment opportunities”.

The UK free trade ­agreement

The UK and India agreed on their free trade agreement on 6 May 2025, and it is set to take effect from 2026. Reported as ”the best deal India has ever agreed”, it is expected to reduce Indian tariffs on UK exports by GBP 400 million in the first year, gradually increasing to around GBP 900 million after ten years. 

In addition to the tariff reduction, the agreement allows UK businesses access to approximately 40,000 public tenders in India every year, with an estimated value of more than GBP 38 million per year in goods, services, and construction.  

The boost to the Indian maritime sector

India seeks to reduce reliance on foreign ships, and to have Indian-flagged vessels carry a greater volume of cargo. In a press release on 25 February 2025, the Indian Ministry of Ports, Shipping and Waterways announced a significant boost to the Indian maritime sector, with particular emphasis on the shipbuilding industry. 

Of the aforementioned GBP 2.2 billion GBP Maritime Development Fund, the Indian government will contribute 49% of the capital, with the rest expected to come from a collaboration with major port authorities, public sector entities and the private sector. 

Additionally, a package of direct financial subsidies to Indian shipyards, labelled the Shipbuilding Financial Assistance Policy (“SBFAP”) 2.0 and valued at approximately 180 billion rupees (GBP 1.5 billion) has been introduced. This offers significant opportunities for Norwegian and UK businesses providing engineering and manufacturing services relevant to the shipbuilding industry, as demand for such services is expected to increase significantly. 

Furthermore, shipowners may benefit from the Indian Shipbreaking Credit Note, which gives shipowners a credit note in an amount of 40% of the scrap value for vessels scrapped in India, which may be used towards paying the purchase price for ships built in India. 
Given the unpredictable international sanctions landscape, businesses should consider incorporating necessary precautions and appropriate contractual provisions when entering into agreements in this sector.

With offices in both Norway and London, as well as a presence in Asia through the Singapore and Shanghai offices, Wikborg Rein has a long standing tradition of assisting in trade and investments into and out of India.