UK-India Trade Agreement finalized: Industry groups and businesses express optimistic sentiments
In a historic move, India and the UK have signed the Comprehensive Economic and Trade Agreement (CETA), marking a significant milestone in their bilateral relationship. The agreement, the result of 14 rounds of talks over three years, is expected to double bilateral trade to over US$120 billion by 2030.
For India, the CETA offers substantial benefits across various sectors.
Enhanced Export Competitiveness
Around 99% of Indian exports to the UK will enjoy duty-free access, covering nearly all tariff lines and trade value. This will particularly benefit sectors such as textiles, marine products, leather, footwear, sports goods, cosmetics, toys, alcoholic beverages, gems and jewellery, medical devices, engineering goods, and auto parts.
The agreement also extends duty-free access to agricultural exports, including fruits, vegetables, spices, ready-to-eat foods, pulses, mango pulp, pickles, and emerging products like jackfruit, millets, and organic herbs. This is expected to support a projected 20% export growth over three years and India’s goal of $100 billion agricultural exports by 2030.
The fisheries sector in Indian states such as Andhra Pradesh, Odisha, Kerala, and Tamil Nadu will also benefit from access to the UK's $5.4 billion marine import market.
Tariff Reductions on Imports
India will reduce tariffs on key UK exports such as Scotch whisky, gin, and automobiles. Whisky and gin duties will halve from 150% to 75%, initially, then down to 40% over 10 years. Import duties on automobiles will drop dramatically from 110% to 10%, a major policy change away from protectionism that could improve domestic competitiveness and consumer choices.
Services and Labour Mobility
The CETA facilitates easier movement for Indian professionals, including contractual service suppliers and independent professionals like yoga instructors, classical musicians, and chefs, enhancing service sector opportunities in the UK. It includes provisions for social security benefit portability between the two countries, enabling smoother labour mobility and protection of workers’ rights.
Other Impacts
The agreement includes Technical Barriers to Trade (TBT) provisions that will simplify certification processes, reducing export time and costs. The inclusion of chapters on social and developmental issues, such as labour rights, gender equality, anti-corruption, and development cooperation, marks a progressive approach in India’s trade agreements. SMEs may also benefit from targeted support embedded in the agreement.
For the UK, the CETA opens up increased opportunities for exporters, particularly in sectors such as automobiles, alcoholic beverages, and healthcare equipment. Indian demand for British automobiles, healthcare equipment, soft drinks, and beauty items is expected to rise due to lowered Indian import tariffs from 15% to 3% on average. The agreement also opens up increased opportunities for UK service providers, especially in sectors where Indian demand and professional mobility can be leveraged.
The success of the CETA will depend on how effectively both sides convert market access into meaningful outcomes for jobs, supply chains, and investors. The agreement lays the foundation for shared prosperity between India and the UK and is poised to liberalize almost the entire trade value between the two countries, increasing bilateral trade, expanding market access across goods and services, and promoting labour mobility.
The CETA sets a new benchmark for India’s future trade policies, incorporating modern trade elements like digital trade and social clauses. Chandrajit Banerjee, Director General of the Confederation of Indian Industry, expressed that the deal marks a defining moment in the bilateral relationship. The UK-India Vision 2035 aligns closely with strategic priorities of companies like Mahindra Group, including building resilient supply chains, investing in frontier technologies, and fostering a just transition to a low-carbon economy.
- The Comprehensive Economic and Trade Agreement (CETA) will grant India access to duty-free exports for nearly all sectors, potentially benefiting industries such as textiles, marine products, and auto parts by 99%.
- Indian farmers will also have duty-free access to export agricultural products, including fruits, vegetables, and spices, which could lead to a 20% growth in exports within three years.
- The CETA will allow easier movement for Indian professionals, particularly in the service sector, opening opportunities for yoga instructors, musicians, and chefs in the UK.
- The agreement includes provisions for reduced tariffs on imports from the UK, with duties on Scotch whisky, gin, and automobiles expected to decrease significantly, potentially improving domestic competitiveness and consumer choices.
