India and the United Kingdom are set to sign their free trade agreement today, providing a boost to commerce between the two nations in both directions.
The Comprehensive Economic and Trade Agreement (CETA), commonly known as the India-UK Free Trade Agreement (FTA), is set to be a game-changer in the bilateral trade relationship between the two countries. Scheduled to be signed on July 24, 2025, the agreement was finalized after over three years of negotiations and is expected to significantly increase trade and cooperation across multiple sectors.
Key Details
The CETA aims to reduce tariffs and promote trade by offering duty-free access to a large portion of traded goods. India will cut tariffs on 90-99% of traded goods, significantly lowering the average tariff on UK goods from 15% to approximately 3%. The UK, in turn, will remove duties on many Indian exports such as clothing, home textiles, gold and diamond jewellery, leather goods, machinery, and auto parts.
Indian tariffs on Scotch whisky will gradually decrease from 150% to 30% over 10 years, making it more affordable in India. A limited number of Indian car imports will see duties cut from 100% to 10%. UK's perfumes, cosmetics, and toiletries will also see a reduction in import duties by India in stages.
Sectors Benefiting
The agreement will benefit several sectors, including manufacturing and textiles, agriculture, pharmaceuticals, chemicals and plastics, services, and renewable energy. Indian garment exporters and leather product manufacturers will benefit from duty-free access, increasing their export competitiveness. Key Indian agricultural products like basmati rice, shrimp, tea, spices, and frozen prawns will enter the UK market tariff-free or at reduced tariff levels, aiding farmers and exporters.
Indian drug manufacturers will gain faster regulatory approvals and simplified access to the UK healthcare system, especially for generic medicines. Lower duties will enable export growth from Gujarat and Maharashtra, with ambitious export doubling targets by 2030. The agreement enhances mobility for professionals including engineers, accountants, with relaxed visa rules and recognition of qualifications, facilitating easier work opportunities in the UK.
The deal encourages UK investment in Indian solar, hydrogen, and electric vehicle (EV) projects, promoting green growth and cost reductions.
Additional Provisions and Implications
The agreement includes provisions for modern trade issues such as digital trade, intellectual property rights, environment, and labor standards, making it a strategic template for future trade deals. The pact aims to increase bilateral trade by about £25.5 billion annually and raise the UK's GDP by roughly £4.8 billion, with similar economic gains expected for India.
To protect sensitive sectors, some agricultural products remain safeguarded through phased tariff reductions and special protections, balancing domestic interests. The deal facilitates better social security provisions for Indian professionals temporarily working in the UK through the Double Contribution Convention, allowing them to keep social security contributions in India for up to 3 years.
Summary of Impact
| Sector | Indian Benefits | UK Benefits | |-----------------------|--------------------------------------------|--------------------------------------| | Textiles & Apparel | Zero tariffs, competitive exports | Cheaper imports | | Jewellery & Leather | Duty-free access, boosts MSMEs & luxury | Access to diverse products | | Agriculture | Cheaper exports (rice, spices, shrimp) | More variety at lower prices | | Pharmaceuticals | Easier approvals, generic medicine access | Access to affordable drugs | | Machinery & Auto Parts| Lower export costs | Cheaper imports for UK manufacturers | | Services | More mobility for Indian professionals | Access to Indian talent | | Renewable Energy | Increased UK investment, green growth | Investment opportunities in renewables|
This agreement marks a significant deepening of India-UK economic ties and is expected to be a major element of collaboration under their 2030 bilateral roadmap. It balances expanded market access with protections for sensitive sectors and aims to promote inclusive growth across manufacturing, agriculture, services, and green energy.
- The Comprehensive Economic and Trade Agreement (CETA) is anticipated to significantly enhance trade between India and the UK, with Indian tariffs on 90-99% of traded goods being reduced, decreasing the average tariff on UK goods from 15% to approximately 3%.
- The agreement will benefit the manufacturing and textiles sector, as Indian garment exporters and leather product manufacturers will receive duty-free access, increasing their export competitiveness.
- Indian drug manufacturers will gain faster regulatory approvals and simplified access to the UK healthcare system, while the deal also aims to encourage UK investment in Indian solar, hydrogen, and electric vehicle projects.
- The CETA includes provisions for modern trade issues such as digital trade, intellectual property rights, environment, and labor standards, making it a strategic template for future trade deals.
- To protect sensitive sectors, some agricultural products remain safeguarded through phased tariff reductions and special protections, balancing domestic interests.
- The agreement is expected to promote inclusive growth across various sectors, including manufacturing, agriculture, services, and green energy, and is anticipated to be a major element of collaboration under their 2030 bilateral roadmap.
