India-UK trade agreement comes into force, opening new opportunities for businesses and exporters

A major trade agreement between India and the United Kingdom officially came into effect on Wednesday, marking a significant step toward strengthening economic relations between the two countries. The India-UK Comprehensive Economic and Trade Agreement (CETA) is expected to reduce trade barriers, lower tariffs on thousands of products, and create wider opportunities for businesses, service providers, and professionals in both markets.

Under the agreement, Indian exporters will receive duty-free access to a large majority of British tariff categories. Several key sectors are expected to benefit, including textiles, leather products, footwear, marine exports, gems and jewellery, and processed food industries. The reduction in import duties is aimed at making Indian goods more competitive in the British market by lowering costs for exporters.

The United Kingdom, meanwhile, will gain improved access to India’s rapidly expanding economy through a combination of tariff reductions, investment opportunities, and greater market access. British companies are expected to benefit from new opportunities in sectors including automobiles, financial services, education, insurance, professional services, and government procurement.

Indian Prime Minister Narendra Modi welcomed the implementation of the agreement, saying that the trade deal, along with a separate social security arrangement, would strengthen economic cooperation between the two nations. In a statement shared on social media platform X, Modi said the agreements would provide new opportunities and create fresh momentum for Indian farmers, entrepreneurs, and small businesses.

Trade figures highlight the importance of economic relations between the two countries. During the 2025-26 financial year, India exported goods worth approximately $13.44 billion to the UK, while imports from Britain stood at around $11.68 billion. In addition, bilateral trade in services reached $35.44 billion in 2024, with India recording a services trade surplus of nearly $7.9 billion, according to Indian trade ministry data.

As part of the agreement, Britain will immediately remove tariffs on 96.8 percent of its tariff lines, covering near 97.7 percent of trade by value. India will also reduce import duties, removing tariffs immediately on 64.1 percent of tariff lines and gradually eliminating duties on another 21 percent. However, certain sensitive products will remain protected under the agreement.

Indian officials believe industries that previously faced British tariffs ranging between 4 percent and 20 percent will see major benefits. Export sectors such as marine products, textiles, leather goods, footwear, and jewellery will gain improved access as customs duties are removed.

The engineering sector is also expected to experience significant growth following the trade agreement. The United Kingdom is already among India’s top five engineering export destinations, with exports reaching approximately $4.7 billion during 2025-26. According to the Engineering Export Promotion Council (EEPC) of India, engineering exports to Britain increased by more than 34 percent year-on-year, reaching nearly $972.5 million during the first two months of the 2026-27 financial year.

EEPC Chairman Pankaj Chadha said the agreement would provide better opportunities for products such as electrical equipment, automobile components, and steel goods. He predicted that India’s engineering exports to the UK could surpass $7.5 billion by 2029-30

The agreement will also provide advantages for British exporters, particularly through India’s gradual opening of its automobile and alcoholic beverage markets. Passenger vehicle imports from the UK will operate under a phased quota system, allowing up to 37,000 fully built vehicles annually to enter India at preferential tariff rates.

Overall, the India-UK trade pact represents a significant move toward deeper economic cooperation, with both countries expecting increased investment, expanded trade flows, and stronger business partnerships in the years ahead.