The India-UK Comprehensive Economic and Trade Agreement (CETA) officially entered into force on July 15, 2026, paving the way for zero-duty market access for nearly 99% of India's exports, covering almost 100% of bilateral trade value. On the first day of its implementation, more than 50 consignments of goods worth over $140 million were shipped from India to the UK, according to the Commerce Ministry.
India and the UK have set an ambitious target of doubling bilateral trade from $55 billion to $100 billion by 2030.
What does the agreement cover beyond tariff cuts?
The trade agreement establishes a comprehensive regulatory framework covering services, investment protection, digital trade, intellectual property rights, government procurement, financial services, labour and environmental standards, while also addressing several Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) measures.
What are the core trade-offs for India and the UK?
New Delhi fought for and secured immediate tariff elimination for its traditional labour-intensive manufacturing sectors, such as textiles, garments, footwear, gems and jewellery, and marine products, along with a landmark breakthrough on the cross-border movement of professionals. London, meanwhile, leveraged its lower baseline tariffs to extract deep, phased concessions in India's high-tariff sectors.
While both countries have attempted to maximise gains, they have retained protection for sensitive sectors. India has maintained its protectionist stance on dairy products and several agricultural items, including cereals, apples, pineapples, oranges, pomegranates, tomatoes, onions, garlic, cauliflower, cabbage, radish, peas, beans and pumpkins. The UK, for its part, has kept its markets closed to products such as chicken, pork, eggs, rice and sugar.
Which Indian sectors will gain the most?
Some of India's labour-intensive sectors, from textiles and marine products to gems and jewellery, are expected to emerge as the biggest beneficiaries of CETA.
The marine sector is likely to be among the immediate winners. With the UK eliminating tariffs of up to 20% on Indian seafood, exporters of frozen shrimp, prawns, fish, cuttlefish, squid, prepared seafood and fish oils are expected to gain a significant competitive advantage. The UK imports roughly $4.9 billion worth of marine products annually, but India's share currently stands at a modest $126 million. Given that India exports $7.8 billion worth of marine products globally, the removal of tariff barriers provides Indian aquaculture processors with the financial incentive to expand infrastructure and capture a larger share of the UK market.
How will the jewellery sector fare under CETA?
Tariffs on Indian exports have been reduced from 4% to zero. The UK imports nearly $4 billion worth of gems and jewellery annually, and Indian exporters are well positioned to leverage the preferential tariff advantage. India currently exports around $1.03 billion worth of gems and jewellery to the UK and has a global export footprint of nearly $29.7 billion. Industry estimates suggest exports to the UK could rise from about $754 million to nearly $2.5 billion over the next three years.
What are the benefits to other sectors?
CETA grants 100% duty-free access across 1,143 textile and clothing tariff lines, eliminating UK tariffs of up to 12%. Tariffs of up to 16% on leather and footwear products have also been removed across an $8.9 billion UK import market. Engineering goods, which account for one of the largest shares of India's exports to the UK, are projected to exceed $7.5 billion by 2029-30, driven by tariff elimination and expanded market access. India's pharmaceutical exports to the UK are projected to rise by 8.66% to $981.16 million in FY27 from $902.96 million in FY26.
What are the UK's major gains, especially in the automobile sector?
India's automotive sector has traditionally remained one of the most protected markets globally, with tariffs of 110% on large imported vehicles and 66% on medium and small cars. CETA partially opens this market through a quota-based, phased liberalisation framework.
For internal combustion engine (ICE) passenger vehicles imported as completely built units (CBUs), India has provided tariff concessions under an annual quota starting at 20,000 units and rising to 37,000 units by Year 5, before tapering to 15,000 units by Year 15. Greater concessions are available for large-engine ICE vehicles (above 3,000 cc for petrol and 2,500 cc for diesel), with in-quota tariffs falling to 10% over five years and out-of-quota tariffs declining to 50% over 10 years.
Has India opened up the EV sector as well?
Not exactly. New Delhi has maintained safeguards for its domestic clean mobility ambitions. For the first five years of the agreement, the UK will receive no tariff concessions on electric, hybrid or hydrogen-powered vehicles.
Concessions for electric vehicles will begin only in the sixth year, under a separate quota that starts at 4,400 vehicles and rises to 22,000 by Year 15. Vehicles priced below £40,000 on a cost, insurance and freight (CIF) basis are excluded from tariff concessions, thereby protecting India's mass-market EV segment. Zero-emission two-wheelers, commercial buses and freight trucks have been kept completely outside the scope of the agreement.
Will cheaper UK beverages flood India?
Another major gain for the UK is the reduction in tariffs on premium alcoholic beverages. Under CETA, India's 150% basic customs duty on premium ciders, sake, brandies, gin, vodka and liqueurs will decline to 110% in the first year and gradually fall to 75% by Year 10.
For Scotch whisky, the terms are more favourable. The 150% tariff has been reduced to 75% immediately upon implementation and will decline further to 40% over 10 years.
To prevent cheap bulk spirits from flooding the Indian market, tariff concessions are available only for alcoholic beverages priced above a prescribed Minimum Import Price (MIP), generally set at $5 per litre (or approximately $3.75 for a standard 750 ml bottle).
The near-term impact on Indian distillers is expected to remain limited, as Scotch currently accounts for only 2.5% of India's whisky market by volume, with the market dominated by country-made liquor (88%) and Indian Made Foreign Liquor (IMFL) at 9.5%.
Has India opened up the EV sector as well?
Not exactly. New Delhi has maintained safeguards for its domestic clean mobility ambitions. For the first five years of the agreement, the UK will receive no tariff concessions on electric, hybrid or hydrogen-powered vehicles.
Concessions for electric vehicles will begin only in the sixth year, under a separate quota that starts at 4,400 vehicles and rises to 22,000 by Year 15. Vehicles priced below £40,000 on a cost, insurance and freight (CIF) basis are excluded from tariff concessions, thereby protecting India's mass-market EV segment. Zero-emission two-wheelers, commercial buses and freight trucks have been kept completely outside the scope of the agreement.
Will cheaper UK beverages flood India?
Another major gain for the UK is the reduction in tariffs on premium alcoholic beverages. Under CETA, India's 150% basic customs duty on premium ciders, sake, brandies, gin, vodka and liqueurs will decline to 110% in the first year and gradually fall to 75% by Year 10.
For Scotch whisky, the terms are more favourable. The 150% tariff has been reduced to 75% immediately upon implementation and will decline further to 40% over 10 years.
To prevent cheap bulk spirits from flooding the Indian market, tariff concessions are available only for alcoholic beverages priced above a prescribed Minimum Import Price (MIP), generally set at $5 per litre (or approximately $3.75 for a standard 750 ml bottle).
The near-term impact on Indian distillers is expected to remain limited, as Scotch currently accounts for only 2.5% of India's whisky market by volume, with the market dominated by country-made liquor (88%) and Indian Made Foreign Liquor (IMFL) at 9.5%.
How are Indian professionals benefiting from the deal?
Historically, Indian professionals sent to the UK on temporary assignments were required to contribute roughly 23% of their salaries to the UK's National Insurance system while simultaneously making mandatory social security contributions in India. This effectively increased employment costs for Indian companies operating in the UK.
The Double Contributions Convention (DCC) under the trade deal eliminates this dual contribution burden. Under the new arrangement, employees of Indian companies working in the UK for up to five years will be exempt from making National Insurance contributions in the UK, provided they continue contributing to India's social security system.
How did India address the steel safeguard measures?
Even after negotiations concluded, steel safeguard measures remained a major sticking point because the original agreement did not adequately address the UK's import restrictions.
The UK operates a steel safeguard mechanism that imposes tight import quotas and a punitive 50% tariff on steel imports exceeding those quotas. India successfully negotiated a dedicated preferential steel quota worth approximately $350 million—significantly higher than its historical steel exports of about $200 million to the UK—along with access to residual quotas.
Will carbon tax play spoilsport?
While CETA significantly lowers border tariffs, the UK's proposed Carbon Border Adjustment Mechanism (CBAM)—which seeks to impose a carbon levy on energy-intensive imports such as steel, aluminium, cement and fertilisers—could emerge as one of the biggest structural challenges for Indian exporters.
A significant portion of India's manufacturing sector remains dependent on coal-based power generation, resulting in relatively high carbon intensity. Once the UK fully implements CBAM, Indian exporters could face substantial compliance costs despite enjoying tariff-free market access under CETA.
What is the trade target under CETA?
India and the UK have set an ambitious target of doubling bilateral trade from the current $55 billion to $100 billion by 2030.