July 20 – India and the United Kingdom’s landmark free trade agreement came into force on Wednesday, eliminating tariffs on thousands of products and opening new opportunities for businesses, professionals and investors in both countries.
The India-UK Comprehensive Economic and Trade Agreement (CETA) grants Indian exporters duty-free access to most British tariff lines, providing a major boost to key sectors including textiles, leather, footwear, marine products, gems and jewellery, engineering goods and processed foods.
Britain, meanwhile, gains greater access to one of the world’s fastest-growing major economies through phased tariff reductions and quotas covering products such as automobiles and silver, alongside improved access in financial services, education, insurance, professional services and government procurement.
Prime Minister Narendra Modi welcomed the agreement, saying it would strengthen economic ties between the two countries and inject “fresh momentum” into India’s farmers, entrepreneurs and small businesses.
The agreement comes as bilateral trade continues to grow. India exported goods worth $13.44 billion to Britain and imported $11.68 billion during the 2025/26 financial year. Services trade reached $35.44 billion in 2024, with India recording a services trade surplus of nearly $7.9 billion, according to India’s Ministry of Commerce.
Under the deal, Britain will immediately eliminate tariffs on 96.8 percent of its tariff lines, covering 97.7 percent of imports from India by value. India will abolish tariffs immediately on 64.1 percent of tariff lines and gradually remove duties on a further 21 percent, while protecting a number of sensitive products.
Indian exporters are expected to benefit significantly in sectors where UK import duties previously ranged between 4 and 20 percent. Tariffs on marine products, textiles, leather goods, footwear, gems and jewellery will be scrapped, making Indian exports more competitive in the British market.
India’s engineering sector is also expected to see strong gains. Britain is already among India’s five largest engineering export destinations, with shipments reaching $4.7 billion in 2025/26. Exports rose 34.4 percent year-on-year to $972.5 million during the first two months of the 2026/27 financial year, according to the Engineering Export Promotion Council (EEPC).
EEPC Chairman Pankaj Chadha said the agreement would improve market access for products including electrical machinery, auto components and steel products, helping engineering exports to Britain surpass $7.5 billion by 2029/30.
For British businesses, the agreement gradually opens India’s highly protected automobile and alcoholic beverages markets. Passenger vehicle imports will be subject to an annual quota of 37,000 fully built vehicles, which will benefit from preferential tariff rates under a phased implementation plan.
The services component of the agreement expands market access across 137 sub-sectors, including information technology, telecommunications, finance, business services and education. It also simplifies temporary entry rules for business visitors, investors, intra-company transferees and independent professionals.
Alongside the trade pact, the two countries have implemented a Double Contribution Convention, allowing eligible Indian professionals and their employers to avoid paying into Britain’s National Insurance system for assignments of up to five years. The measure is expected to benefit around 75,000 Indian workers and 900 employers.
The agreement also gives Indian companies access to Britain’s government procurement market, estimated to be worth £90 billion ($121 billion) annually, while India will provide reciprocal procurement opportunities valued at approximately $114 billion.
The trade pact marks one of India’s most significant bilateral economic agreements in recent years and is expected to strengthen trade, investment and services flows between the world’s fifth and sixth largest economies.