On July 24, 2025, India and the United Kingdom formalized a historic Comprehensive Economic and Trade Agreement (CETA), marking a pivotal moment in their bilateral economic relations. Signed during Prime Minister Narendra Modi’s official visit to London, in the presence of UK Prime Minister Keir Starmer, this agreement is poised to redefine the economic partnership between the two nations. Far more than a conventional trade deal, the India-UK CETA represents a strategic commitment to fostering deeper ties between people, businesses, and institutions, with an ambitious goal to double bilateral trade to $120 billion by 2030. This article provides a comprehensive overview of the agreement, its key provisions, sectoral impacts, and broader implications for both nations.

Background and Strategic Context

The India-UK CETA is the culmination of over three years of negotiations, initiated in January 2022, and finalized on May 6, 2025, following accelerated talks at the G-20 Summit in Rio de Janeiro in November 2024. The agreement comes at a time of global trade uncertainty, driven by tariff disruptions initiated by U.S. policies under President Donald Trump. As a response, the CETA positions India and the UK to strengthen their economic resilience and deepen integration in a rapidly evolving global trade landscape. With current bilateral trade valued at approximately $56 billion (FY25), the agreement builds on a robust foundation, with India as the UK’s fourth-largest export destination and the UK as a significant market for Indian goods and services.

The CETA is India’s 16th free trade agreement and its most comprehensive with a G-7 nation, covering 26 areas, including goods, services, digital trade, intellectual property, government procurement, and sustainability. It is also the UK’s most ambitious trade deal in the Indo-Pacific region since Brexit, reflecting a shared vision for inclusive growth, innovation, and economic cooperation.

Key Provisions of the India-UK CETA

Tariff Reductions and Market Access

The CETA introduces sweeping tariff liberalizations to facilitate trade in goods and services:

Indian Exports to the UK: The agreement grant duty-free access to 99% of Indian exports by value, covering nearly 100% of tariff lines. This includes labor-intensive sectors such as textiles, footwear, leather, gems and jewelry, marine products, processed foods, and emerging sectors like engineering goods, auto components, and organic chemicals. Previously, Indian exports faced tariffs ranging from 4% to 16%, with textiles facing up to 12%, marine products up to 20%, and chemicals up to 8%. The elimination of these duties is expected to unlock $23 billion in opportunities for Indian exporters, enhancing competitiveness against countries like Bangladesh, Cambodia, and Vietnam.

UK Exports to India: India will reduce tariffs on 90% of UK tariff lines, covering 92% of its imports from the UK. The average tariff on UK goods will drop from 15% to 3%, with 64% of tariff lines becoming duty-free upon implementation and 85% eligible for tariff-free entry after a 10-year phase-in period. Key UK exports, such as Scotch whisky, gin, automobiles, aerospace components, and medical devices, will benefit significantly. For instance, tariffs on Scotch whisky and gin will decrease from 150% to 75% initially and to 40% by year 10, while automotive tariffs will fall from over 100% to 10% under a quota system for up to 10,000 units annually.

Services Sector and Mobility

The CETA strengthens India’s services sector, which accounts for 54% of its economy, by providing greater market access for Information Technology (IT), IT-enabled Services (ITeS), education, finance, and professional services. The agreement simplifies visa procedures for Indian professionals, including contractual service suppliers (e.g., architects, engineers, chefs, yoga instructors), business visitors, intra-corporate transferees, and independent professionals. A significant achievement is the Double Contribution Convention, which exempts Indian workers in the UK from social security contributions for three years, reducing costs for businesses and enhancing talent mobility. Family members of Indian professionals will also gain work rights in the UK, further easing cross-border employment.

For the UK, the agreement ensures market certainty for its services sectors, which export over $678 billion globally, particularly in telecoms, construction, financial, and professional services. Measures such as binding India’s foreign investment cap for the insurance sector and encouraging mutual recognition of professional qualifications will support UK firms in accessing India’s growing middle class, projected to reach 60 million by 2030.

Agricultural and Processed Food Exports

The CETA provides unprecedented access to the UK’s $63.4 billion agricultural market, with over 95% of agricultural and processed food tariff lines attracting zero duty. Indian farmers and exporters will benefit from duty-free access for products such as fruits (grapes, mangoes), vegetables, cereals, turmeric, pepper, cardamom, ready-to-eat foods, mango pulp, pickles, and pulses. Marine products, including shrimp, tuna, fishmeal, and feeds, will also enjoy zero-duty access, tapping into the UK’s $5.4 billion marine import market, where India currently holds a modest 2.25% share. The agreement’s Sanitary and Phytosanitary (SPS) measures streamline certifications, reducing delays and compliance costs, while a bilateral SPS Committee will meet biannually to address technical issues.

Sensitive Indian agricultural products, such as dairy, apples, edible oils, and oats, are excluded from tariff concessions to protect domestic producers. The agreement is expected to boost India’s agricultural exports by over 20% in three years, contributing to its goal of $100 billion in agri-exports by 2030.

Micro, Small, and Medium Enterprises (MSMEs)

The CETA prioritizes inclusivity, particularly for India’s MSMEs, which contribute 30.1% to GDP and 45.8% to exports in FY25. Duty-free access and simplified standards will benefit MSME hubs in cities like Agra, Kanpur, Kolhapur, and Chennai, particularly in textiles, leather, footwear, and gems and jewelry. The agreement also promotes access to global value chains for women and youth entrepreneurs, startups, and artisans, fostering innovation and sustainable practices.

Intellectual Property and Sustainability

The CETA enhances intellectual property protections, particularly for the UK’s creative sector, with commitments to protect copyrights for at least 60 years. It also acknowledges traditional knowledge in the patent process for genetic resources, benefiting Indian farmers. Provisions for sustainable trade practices and reduced non-tariff barriers align with India’s “Make in India” initiative and the UK’s focus on green finance and advanced technologies.

Rules of Origin and Trade Remedies

The agreement includes strict rules of origin to ensure only domestically produced or substantially transformed goods benefit from tariff concessions. A Trade Remedies chapter provides a safety net against unfair practices, such as dumping or subsidized imports, while a Goods Sub-Committee will meet biennially to ensure smooth implementation.

Sectoral Impacts

Textiles and Apparel

Indian textiles, previously facing 10-12% tariffs in the UK, will gain duty-free access, eliminating the duty disadvantage against competitors like Bangladesh and Cambodia. Exports of readymade garments, home textiles, carpets, and traditional products like Bhagalpur silk, Pashmina shawls, and Kanchipuram sarees are projected to increase by 10%, potentially adding 200,000–500,000 jobs over five years.

Gems and Jewelry

With current exports valued at $941 million, the elimination of tariffs is expected to double India’s gems and jewelry exports to the UK within 2-3 years, tapping into the UK’s $3 billion annual jewelry import market.

Marine Products

The CETA eliminates tariffs on Indian marine products, previously taxed at 4.2–8.5%, unlocking rapid growth in shrimp, tuna, fishmeal, and feeds. Coastal states like Andhra Pradesh, Odisha, Kerala, and Tamil Nadu are poised to benefit significantly.

Chemicals and Pharmaceuticals

India’s chemical exports, valued at $570 million in 2024, are projected to increase by 30–40% in the first year due to duty-free access for over 1,200 chemical products. Pharmaceutical firms will benefit from fast-track market access and mutual recognition of Good Manufacturing Practices, reducing inspection duplication.

Engineering and Automotive

Duty-free access for engineering goods, auto components, and limited quotas for electric and hybrid vehicles will enhance India’s competitiveness. The UK’s aerospace and automotive sectors will benefit from tariff reductions from 11% and 110% to zero and 10%, respectively.

Processed Foods

Tariffs on 99.7% of processed food lines have been slashed from up to 70% to zero, boosting exports of mango pulp, pickles, ready-to-eat meals, and value-added coffee products.

Economic and Social Impacts

The CETA is projected to create 100,000 additional jobs in India as trade doubles, particularly in labor-intensive sectors. Indian youth, comprising 27.3% of the population, will benefit from enhanced employment opportunities in IT, healthcare, finance, and creative sectors. The agreement’s focus on MSMEs, women, and youth entrepreneurs aligns with India’s vision of becoming an economic powerhouse by 2047. For the UK, the deal is expected to increase exports by £15.7 billion ($20.2 billion) and GDP by £4.8 billion annually in the long term, supporting 2,200 jobs through £6 billion in new investments.

Consumers in both countries will benefit from lower prices. In India, British products like whisky, cars, cosmetics, and medical devices will become more affordable, while UK consumers will access cheaper Indian textiles, footwear, and agricultural products.

Challenges and Implementation

While the CETA has been signed, it awaits ratification by both the Indian and UK Parliaments, with implementation expected by mid-2026. Non-tariff barriers, such as UK quality standards, and state-level taxes in India (e.g., on alcohol) may pose challenges. The agreement includes mechanisms for regular reviews, a Joint Committee, and dispute resolution within 120–150 days to address emerging issues.

Broader Implications

The India-UK CETA is a strategic response to global trade uncertainties, positioning both nations to diversify supply chains and reduce reliance on volatile markets. For India, it supports the “Make in India” initiative, enhances export competitiveness, and aligns with its $250 billion engineering export target by 2030. For the UK, it strengthens post-Brexit trade ties and taps into India’s growing middle class. The agreement also sets a precedent for India’s ongoing trade negotiations with the EU, U.S., and other partners, reinforcing its role as a global economic powerhouse.

Conclusion

The India-UK Comprehensive Economic and Trade Agreement is a transformative milestone that transcends traditional trade deals. By eliminating tariffs on 99% of Indian exports, reducing UK tariffs in India from 15% to 3%, and fostering cooperation in services, mobility, and sustainability, the CETA lays the foundation for a robust economic partnership. With a target to double bilateral trade to $120 billion by 2030, the agreement promises significant benefits for businesses, farmers, MSMEs, and consumers in both nations. As India and the UK navigate a complex global trade environment, the CETA stands as a beacon of collaboration, inclusivity, and shared prosperity, heralding a new era in their economic ties.