India and the United Kingdom’s Comprehensive Economic and Trade Agreement (CETA) has come into effect, cutting tariffs on thousands of goods and increasing access for service firms in both countries.
The agreement, which came into effect on Wednesday, is expected to give Indian exporters immediate duty-free access to most British tariff lines, benefitting labour-intensive sectors such as textiles.
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On the other hand, the UK will gain wider access to the Indian markets through phased tariff cuts and quotas in sectors, including automobiles.
In a post on X, India’s Commerce and Industry Minister Piyush Goyal said the agreement was a “defining milestone in India-UK ties”.
“The India-UK FTA creates unprecedented opportunities for our textiles, leather, gems & jewellery, engineering goods, marine products, chemicals, processed foods, MSMEs, farmers and manufacturers,” he said. “It also opens new frontiers for our IT, professional, financial, education and business services sectors, while expanding mobility for Indian talent.”
Here’s what we know about the agreement:
How significant is this trade deal?
The deal is expected to increase India’s exports to the UK and lower the cost of British imports.
A British government policy paper published on Wednesday hailed CETA and said it had secured the “best deal that any country has ever agreed with India”.
“Through this deal, India will remove or reduce tariffs, or pre-existing zero tariffs, on 90 percent tariff lines, which will cover 92 percent of existing goods imports from the UK (based on 2022 trade),” the policy paper said.
At the same time, the UK will immediately scrap duties on 96.8 percent of tariff lines, which cover 97.7 percent of their trade value.
But the deal’s significance comes from the fact that the UK has removed tariffs on almost all Indian goods.
India will also remove duties at once on 64.1 percent of tariff lines and phase out tariffs on a further 21 percent, while excluding sensitive products.
According to India’s Ministry of Commerce and Industry data, the country exported $13.44 bn worth of goods to the UK in the financial year 2025-26, while the imports stood at $11.68bn. Bilateral services trade totalled $35.44 bn in 2024, with India running a services surplus of nearly $7.9bn, the Reuters news agency reported, citing data.
In a post on X on Wednesday, Indian Prime Minister Narendra Modi said the two countries’ “economic linkages are going to get even deeper”.
“Several vibrant sectors will gain stronger access to the UK market. It will also deepen cooperation in technology, professional services and innovation, while supporting greater mobility for skilled Indian talent,” he wrote.
“This moment reflects the trust between our democracies and our resolve to build a forward-looking partnership driven by trade, technology, investment and innovation. India and the UK will continue working together for shared prosperity.”
What British products are now cheaper for Indians?
According to the British policy paper, products including cosmetics, whiskies, chocolates, soft drinks and lamb will be cheaper and benefit from the tariff cut.
Manufacturing sectors are also expected to benefit from the agreement, including cars, electrical circuits, high-end optical products and medical devices.
The deal also extends towards market access and will exempt Indian workers who temporarily move to the UK for work from contributing to National Insurance for five years.
Minister Goyal also said “over 75,000 professionals & over 900 companies expected to benefit” from the CETA as it comes into effect.
“IT, ITeS, financial, professional, healthcare, education, engineering, telecommunication, consultancy services to gain,” he added.
Which Indian goods are cheaper in the UK now?
Duties on marine exports, textiles, leather, footwear and gems and jewellery will be removed, helping Indian suppliers compete more effectively in the British market.
Spices, vegetables, processed food and fruits will also be cheaper in the UK following the agreement.
What’s still unaffected by the deal?
While the agreement covers a range of sectors, it does not include poultry, eggs, sugar or dairy.
India has also excluded apples, walnuts and specific categories of gold bars and smartphones.
