UK and India seal long-anticipated free trade agreement, projected to boost bilateral trade volume by approximately twofold by 2030
The India-UK Comprehensive Economic and Trade Agreement (CETA) is set to bring about substantial changes in the trade relations between the two nations. This agreement, which marks a shift from India's traditionally protectionist approach, offers drastic tariff reductions, improved market access, and positive effects on the trade balance across various sectors.
Key Benefits for India
India stands to gain significant benefits from the CETA, with duty-free access for 99% of its exports to the UK, covering nearly 100% of bilateral trade value. This tariff elimination particularly benefits labour-intensive sectors such as textiles, leather, footwear, marine products, spices, processed foods, and gems and jewellery.
The CETA also offers Indian exporters unrestricted access to the UK market without tariff barriers, significantly boosting their competitiveness. Over 95% of agricultural and processed food tariff lines will have zero duties, facilitating exports of fruits, vegetables, cereals, spice mixes, and ready-to-eat meals.
The agreement is expected to increase agricultural exports by over 20% within three years and open opportunities for Micro, Small and Medium Enterprises (MSMEs), startups, artisans, and workers across multiple Indian states and clusters. Indian businesses will also benefit from enhanced access to the UK’s services market and government procurement opportunities worth £38 billion, allowing Indian firms to compete in green infrastructure, health, and transport contracts in the UK.
The CETA embeds mechanisms for dispute settlement, transparency, data flow, and mutual recognition of professionals, which help create a durable economic partnership and encourage deeper cooperation beyond trade. The agreement accompanies the India-U.K. Vision 2035, which focuses on collaboration in technology, defence, education, climate, and innovation — stimulating jobs, investments, and clean energy.
Key Benefits for the UK
The UK will reduce tariffs on 90% of tariff lines, with 85% becoming zero-duty within 10 years, benefiting British exporters in sectors like aerospace, whiskey, cars, and financial services. The CETA offers "locked-in" access to India’s growing market, particularly in financial and professional services, with provisions such as binding foreign investment caps ensuring fair treatment on par with domestic suppliers.
Major British firms such as Airbus and Rolls-Royce have secured new contracts in India, indicative of rising bilateral trade and investment in key sectors like aerospace. Beyond trade, the agreement strengthens collaboration on tackling corruption, organized crime, and irregular migration through intelligence sharing and operational cooperation.
Implications for Trade Balance
The agreement aims to double bilateral trade to $112 billion by 2030, reflecting expanded export opportunities for both sides and expected trade diversification. India’s average tariff on UK goods will drop significantly from 15% to 3%, potentially increasing UK exports to India, while India’s duty-free access will boost Indian exports to the UK, helping reduce trade imbalances. Labour-intensive Indian sectors benefit from competitive advantages due to tariff elimination, which can help balance India's traditionally skewed trade in goods with the UK.
Summary Table of Major Features and Benefits
| Aspect | India’s Benefits | UK’s Benefits | |--------------------------------|--------------------------------------------------------------|-----------------------------------------------------------| | Tariff Reductions | 99% of exports duty-free; 95% agricultural tariffs cut | 90% tariff lines reduced; 85% zero-duty in 10 years | | Market Access | Unrestricted access in UK for textiles, spices, marine, etc. | Access to India's $38B procurement market; financial services openness | | Trade Balance | Expected 20% growth in agricultural exports in 3 years | Increased exports in aerospace, whiskey, cars | | Services & Investment | Greater market access; legal certainty in trade relationship | Equal footing for UK financial firms; large defense & aerospace contracts | | Strategic Cooperation | Vision 2035 roadmap; cooperation in multiple sectors | Intelligence sharing; collaboration on security & migration| | Economic Impact | MSME support; boost to jobs, innovation, regional sectors | Expansion of British companies; investment growth |
In conclusion, the India-UK CETA is a comprehensive agreement that not only eliminates tariffs on the vast majority of traded goods but also enhances market access in goods, services, investment, and procurement, creating a legally robust framework expected to boost bilateral trade, stimulate inclusive economic growth, and deepen strategic partnerships for both countries. The agreement includes provisions in the services sector, including insurance, with binding India's foreign investment cap for the insurance sector and ensuring UK financial services companies are treated on an equal footing with domestic suppliers. The Double Contribution Convention allows Indian companies operating in the UK to avoid social security contributions for up to three years for employees moved from India. It was not mentioned in the provided text when the India-UK CETA was finalized or how the agreement will specifically benefit the youth, farmers, fishers, and the MSME sector, as stated by Prime Minister Narendra Modi. The CETA is expected to boost services exports, liberalise government procurement, and facilitate mobility. The UK will gain tariff-free access to India for 85% of its tariff lines spread over ten years, with 64% of the lines becoming tariff-free on the day of deal implementation. The agreement is expected to boost bilateral trade by Euro 25.5 billion annually, according to a British High Commission official.
- The India-UK Comprehensive Economic and Trade Agreement (CETA) provides duty-free access for 99% of India's exports to the UK, benefiting sectors like textiles, spices, marine products, and processed foods.
- Exporters from India will have unrestricted access to the UK market, with over 95% of agricultural and processed food tariff lines having zero duties, boosting their competitiveness.
- The CETA is expected to increase agricultural exports by over 20% within three years, opening opportunities for Micro, Small and Medium Enterprises (MSMEs) in various Indian states and clusters.
- Indian businesses will benefit from enhanced access to the UK’s services market and government procurement opportunities worth £38 billion, allowing Indian firms to compete in green infrastructure, health, and transport contracts.
- The agreement offers "locked-in" access to India’s growing market for British firms in financial and professional services, with provisions such as binding foreign investment caps ensuring fair treatment.
- The India-UK CETA is a comprehensive agreement that aims to double bilateral trade to $112 billion by 2030, providing a legally robust framework for boosting bilateral trade, stimulating inclusive economic growth, and deepening strategic partnerships for both countries.
