The Comprehensive Economic and Trade Agreement between India and the United Kingdom took effect on Wednesday, marking a significant milestone in trade relations between the two nations. This agreement, aimed at enhancing economic opportunities, lowers tariffs on a vast array of products, offering Indian exporters duty-free access to the majority of British tariff lines. Sectors poised to benefit include textiles, leather, footwear, marine products, gems and jewellery, and processed foods. The agreement is expected to make Indian exports more competitive by reducing tariffs that previously ranged from 4% to 20%.
On the other hand, the agreement affords Britain greater access to India’s burgeoning economy through a phased reduction of tariffs and the introduction of quotas in industries such as automobiles and silver. Additionally, the deal broadens opportunities in procurement, financial services, insurance, education, and professional services. Notably, Britain will eliminate duties on 96.8% of tariff lines immediately, which accounts for 97.7% of trade by value. Meanwhile, India will initially remove tariffs on 64.1% of tariff lines, with further reductions planned for another 21%, while still safeguarding sensitive sectors.
Trade between India and the UK has witnessed steady growth over recent years. In the fiscal year 2025-26, India exported goods valued at $13.44 billion to the UK, while imports from Britain totaled $11.68 billion. Bilateral services trade reached $35.44 billion in 2024, with India enjoying a services surplus of nearly $7.9 billion. The engineering sector in India is expected to experience significant benefits, with exports of engineering goods to the UK amounting to $4.7 billion in 2025-26. Industry experts predict this figure could surpass $7.5 billion by 2029-30.
The agreement’s services component encompasses 137 sub-sectors, which include information technology, telecommunications, finance, business services, and education. It also simplifies the temporary entry process for business travelers, investors, and professionals. An added benefit of the deal comes from the Double Contribution Convention, which exempts eligible Indian professionals and employers from contributing to Britain’s National Insurance system for up to five years, impacting around 75,000 workers and 900 employers.
Furthermore, the agreement opens up government procurement opportunities in both countries, allowing Indian firms access to British contracts and creating reciprocal opportunities for British companies in India. This trade pact is poised to strengthen the economic ties between India and the UK, fostering growth and collaboration across various industries.