The India-UK Comprehensive Economic and Trade Agreement (CETA) came into effect on July 15, marking a significant milestone in bilateral trade relations. The landmark agreement is expected to boost Indian exports, provide duty-free access to the UK market for most products and lower tariffs on several British goods sold in India.
The agreement is the sixth free trade agreement implemented during the Narendra Modi government’s tenure, following similar pacts with Mauritius, the UAE, Australia, the European Free Trade Association (EFTA) and Oman.
Nearly all Indian exports to get duty-free access
Under CETA, almost 99 per cent of Indian exports will enjoy duty-free access to the UK market, benefiting labour-intensive sectors such as textiles, garments, leather, footwear, gems and jewellery, engineering goods, chemicals, agriculture, marine products and processed foods.
According to official data, bilateral trade between India and the UK increased 8.62 per cent to $25.12 billion during 2025-26. While India’s exports stood at $13.44 billion, imports from the UK rose to $11.68 billion. Foreign Direct Investment (FDI) from the UK into India also increased to $1 billion during the year.
Cheaper British products for Indian consumers
The agreement will gradually reduce tariffs on several British products, making imports such as salmon, lamb, chocolates, cosmetics, perfumes, machinery and electronics more affordable for Indian consumers.
One of the biggest beneficiaries will be Scotch whisky, with import duty falling from 150 per cent to 75 per cent immediately and further reducing to 40 per cent over the next 10 years.
India has, however, excluded products such as fresh apples, walnuts, gold bars, smartphones and certain dairy products from tariff concessions.
Auto sector among biggest winners
The automobile sector is expected to benefit significantly. Import duties on UK-made passenger cars will be reduced in phases from 110 per cent to 10 per cent, while tariffs on imported trucks will also be lowered gradually.
On the other hand, qualifying Indian electric, hybrid and hydrogen-powered vehicles exported to the UK will receive duty-free access within specified quotas, enhancing the competitiveness of Indian automobile manufacturers.
IT companies to gain from social security relief
The agreement also includes a Double Contribution Convention, exempting Indian professionals deputed to the UK from paying social security contributions for up to five years. The provision is expected to benefit major Indian IT companies, including Tata Consultancy Services (TCS) and Infosys, by reducing employment costs for overseas assignments.
Trade experts believe the agreement will strengthen India’s integration into global supply chains, improve market access and create new opportunities for exporters while offering consumers a wider range of competitively priced imported products.