The CETA with the former colonial power is India’s 16th such trade pact and will remove taxes on labour-intensive products such as leather, footwear and clothing in the British market, unlocking nearly $23 billion in opportunities. Similarly, whisky and cars from Britain will be cheaper in India.
The agreement between the world’s fourth- and sixth-largest economies was signed in the presence of Prime Minister Narendra Modi and his British counterpart Keir Starmer after three years of negotiations amid the Trump-led tariff uncertainty. The accord will require the British parliament’s approval before it can take effect, a process that may take about a year.
Bigger Opportunities
The accord is critical for the island nation as it provides greater access to the fastest-growing economy in the world, five years after Brexit.
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As part of the agreement, India will cut import duty on Scotch whisky and gin from the UK to 75% initially and to 40% by the 10th year from 150% now. Tariffs on automotive imports will fall to 10% from over 100% under quotas on both sides. Indian manufacturers will gain access to the UK market for electric and hybrid vehicles, also under a quota system.
“A new chapter begins today in the India-UK economic partnership!” Modi said in a post on X. “The signing of the Comprehensive Economic and Trade Agreement (CETA) reflects our shared commitment to enhancing trade, driving inclusive growth and creating opportunities for farmers, women, youth, MSMEs, and professionals.”
India’s exports to the UK rose 12.6% to $14.5 billion, while imports grew 2.3% to $8.6 billion in FY25. India’s tariffs on British products will drop to 3% from 15%.
Modi added: “India-UK CETA will add momentum to the ‘Make in India’-led growth and export promotion. This agreement will also provide Indian consumers with high-quality goods at competitive prices. The future indeed holds the promise of greater prosperity and deeper ties between our nations!”
Since 2014, the country has signed five trade pacts — with Mauritius, the UAE, Australia, EFTA and the UK.
Starmer said the deal would bring “huge benefits” for both countries, making trade cheaper, quicker and easier. “We’ve entered a new global era, and that is one that requires us to step up, not to stand aside… by building deeper partnerships and alliances,” he said. The agreement was signed by commerce and industry minister Piyush Goyal and UK’s secretary of state for business and trade Jonathan Reynolds.
They also unveiled a renewed Comprehensive Strategic Partnership — the UK-India Vision 2035.
“The trade deal, which is forecast to boost bilateral trade by £25.5 billion yearly, is both India’s most comprehensive deal ever, and the UK’s most economically significant bilateral trade deal since leaving the EU,” the UK said in a statement, adding that it significantly improves market access for businesses in both countries, leading to cheaper products and services for consumers. The two sides announced the conclusion of the FTA negotiations on May 6.
India gains
India said it has protected the interests of domestic farmers by excluding dairy products, edible oils, oats and apples in the trade pact while securing zero duties on 95% of agriculture and processed food items.
“This FTA will serve as a catalyst for inclusive growth, benefiting farmers, artisans, workers, MSMEs, startups and innovators while safeguarding India’s core interests and accelerating our journey towards becoming a global economic powerhouse,” Goyal said.
Indian staples such as turmeric, pepper, cardamom, processed goods like mango pulp, pickles and pulses and marine products such as shrimp and tuna will enjoy duty-free access to the UK market.
More than 95% of agricultural and processed food tariff lines will attract zero duties on fruits, vegetables, cereals, pickles, spice mixes, fruit pulps and ready-to-eat meals and processed foods.
“Duty-free access is expected to increase agri exports by over 20% in the next three years,” said an official.
The CETA provides for zero-duty access for shrimp, tuna, fishmeal, feeds, coffee, spices, beverages and processed food.
“Nearly £6 billion in new investment and export wins announced today are a sign of things to come, as future collaboration expands into advanced technologies, critical minerals, green finance, and beyond,” Reynolds said.
“For financial and professional business services, locked-in access will offer certainty to expand in India’s growing market and measures such as binding India’s foreign investment cap for the insurance sector, ensuring UK financial services companies are treated on an equal footing with domestic suppliers,” the UK said in a statement.
Twenty-six British companies have announced new business in India. Airbus & Rolls-Royce will soon begin delivering Airbus aircraft — with over half powered by Rolls-Royce engines — to major Indian airlines as part of around £5 million worth of contracts recently agreed upon.
As part of the reinvigorated partnership, the UK and India have also decided to strengthen cooperation in tackling corruption, serious fraud, organised crime, and irregular migration through enhanced intelligence sharing and operational collaboration.
Services, digital trade
The deal will also facilitate easier access for temporary business visitors, though visas are not covered. Britain and India also agreed to ensure workers no longer have to make social security contributions in both countries during temporary postings in the other nation.
India has also secured an agreement on the Double Contribution Convention. This will exempt Indian professionals and their employers from social security payments in the UK for up to three years, improving the cost competitiveness of Indian talent.
The CETA provides greater market access for IT and IT-enabled services, financial and legal services, professional and educational services, and digital trade.
“Indian professionals, including those deployed by companies to work in UK across all services sectors, professionals deployed on contracts such as architects, engineers, chefs, yoga instructors, and musicians, will benefit from simplified visa procedures and liberalised entry categories, making it easier for talent to work in the UK,” the commerce and industry ministry said.
Under the trade deal, British firms will be able to access India’s procurement market for projects in sectors such as clean energy, and it also covers services sectors such as insurance.
“They have got limited access in our procurement but we have got unfettered access in theirs,” said the official cited above.
Talks for a separate bilateral investment treaty are continuing.
“Women and youth entrepreneurs, farmers, fishermen, startups, and MSMEs will gain new access to global value chains, supported by provisions that encourage innovation, promote sustainable practices, and reduce non-tariff barriers,” the ministry added.
GI push
Bhagalpur silk, Pashmina shawls, Kolhapuri chappal, and Thanjavur dolls will now potentially get shelf space in malls and shops across Britain as the free trade agreement will provide duty concessions to a host of traditional products manufactured in India. Makhana, shahi litchi, Araku coffee, and Kashmiri saffron will also gain greater access to the UK market.
