A Historic Milestone in Bilateral Trade
The India–UK Comprehensive Economic and Trade Agreement (CETA), officially signed on 24 July 2025 by Prime Minister Narendra Modi and UK Prime Minister Sir Keir Starmer, entered into force on 15 July 2026. This landmark deal is India’s first major Free Trade Agreement in over a decade and the UK’s most economically significant bilateral trade deal since Brexit.
The agreement marks a turning point in a relationship that was first formalised as an “Enhanced Trade Partnership” in May 2021, with formal FTA negotiations launching in January 2022. After more than three years of negotiations spanning 26 negotiating rounds, both nations have achieved what negotiators describe as one of the most ambitious trade packages either country has ever concluded.
Key Highlights at a Glance
| Parameter | Details |
|---|---|
| Official Name | India–UK Comprehensive Economic and Trade Agreement (CETA) |
| Signed On | 24 July 2025 |
| Entered Into Force | 15 July 2026 |
| Tariff Liberalisation (India) | 90% of UK tariff lines cut; 85% duty-free within 10 years |
| Tariff Liberalisation (UK) | 99% of Indian tariff lines, covering ~100% of trade value |
| Bilateral Trade Target | USD 120 billion by 2030 (from USD 56 billion at time of signing) |
| Projected Annual Trade Boost | £25.5 billion per year in the long run |
| UK GDP Impact | +£4.8 billion per year |
| India GDP Impact | +£5.1 billion per year |
What Does the FTA Cover?
Goods – Unprecedented Market Access for India
Indian exporters now enjoy duty-free access on nearly 99% of tariff lines in the UK market, covering nearly 100% of bilateral trade value. Key sectors benefiting immediately include:
- Textiles & Apparel – one of India’s largest export categories gains full and immediate zero duty access
- Gems & Jewellery – duty-free access strengthens India’s competitive position in the high-value UK market
- Engineering Goods – machinery, auto components, and capital goods benefit from tariff elimination
- Chemicals & Pharmaceuticals – full tariff elimination is expected to drive a 30–40% increase in India’s chemical exports to the UK, translating to an estimated USD 650–750 million in 2025–26
- Marine Products, Leather & Toys – labour-intensive sectors gain immediate competitiveness
- Agriculture & Food Processing – 1,437 agriculture tariff lines and 985 food processing lines covered
On the UK side, Indian tariff cuts on British goods are phased over time, but include significant reductions for products like whisky and gin (tariffs halved from 150% to 75% immediately, falling to 40% by Year 10), medical devices, aerospace equipment, electrical machinery, chocolates, salmon, and lamb.
Services – Deep Market Access in 137 Sub-Sectors
The services chapter is described as one of the most ambitious in any FTA signed by either country. India has secured wide-ranging commitments from the UK across all 12 major service sectors and 137 sub-sectors, representing over 99% of India’s export interests. Key areas include:
- IT and IT-enabled Services (ITeS)
- Financial Services
- Education and Healthcare
- Professional Services (accountancy, engineering, management consultancy)
- Telecommunications and Aviation Support
India enjoys a services trade surplus with the UK, with exports of USD 19.8 billion against imports of USD 13.2 billion. UK businesses, in return, gain equal treatment as domestic firms in India across committed service sectors.
Professional Mobility
One of the most talked-about provisions involves mobility visas for Indian professionals. The agreement opens pathways for skilled workers, engineers, consultants, and professionals from both countries to work across borders – a key ask by India and a contentious negotiating point that delayed earlier rounds. The Double Contributions Convention (DCC) has also been extended from 36 to 60 months for UK nationals working in India.
SMEs Get Their Own Chapter
For the first time, the UK-India CETA includes a pioneering standalone chapter dedicated to Small and Medium Enterprises (SMEs). It commits both governments to transparency, information-sharing, and measures to reduce barriers that smaller firms would otherwise face when navigating each other’s markets.
Government Procurement
As India rolls out one of the world’s largest infrastructure expansion programmes – covering transport, smart cities, water systems, and logistics – the FTA makes it easier for UK companies to bid on Indian procurement tenders. Conversely, Indian firms gain exposure to UK public procurement opportunities.
What Sectors Should Indian Businesses Watch?
- Pharmaceuticals: India is already among the UK’s key pharma import sources. Zero duties enhance competitiveness significantly.
- IT & Digital Services: Comprehensive services commitments open regulated sectors and provide investment certainty.
- Chemicals: Full and immediate tariff elimination positions India as a credible alternative to the US, China, Germany, and France in the UK’s USD 28.35 billion chemicals market.
- Textiles: Duty-free access helps Indian garment and fabric manufacturers compete directly in a premium market.
- Engineering & Aerospace: India’s growing manufacturing base can leverage reduced tariffs to supply UK OEMs and Tier-1 suppliers.
- Startups & Tech: Professional mobility provisions and mutual recognition frameworks reduce friction for India–UK tech collaborations and cross-border talent flow.
Economic Impact: By the Numbers
“The UK-India trade agreement is one of the most comprehensive trade agreements India has ever done.” — UK Government
- Bilateral trade is forecast to grow by 39%, or £25.5 billion annually, compared to projections without the deal
- The UK expects its exports to India to rise by nearly 60%, adding £15.7 billion by 2040
- Over £1.3 billion in new UK investments from 64 Indian companies were announced alongside the deal, creating approximately 6,900 jobs in the UK
- The UK’s GDP is projected to increase by £4.8 billion per year in the long run; India’s by £5.1 billion per year
- Bilateral trade target: USD 120 billion by 2030
Why This Matters Now – Especially for Indian MSMEs and Exporters
With the agreement now in force as of 15 July 2026, Indian exporters can immediately leverage zero-duty access to the UK market. For businesses in textiles, leather, gems, pharma, chemicals, and engineering, this is not a future opportunity — it is a present competitive advantage.
The UK is currently India’s 11th largest trading partner, with bilateral trade worth nearly USD 57 billion in 2024. The FTA creates the framework to more than double this, while also providing regulatory certainty, faster customs clearance through digital processes, and improved investment protections.
For startups, the professional mobility provisions and mutual recognition chapters reduce barriers to hiring, collaboration, and cross-border operations in a way that no previous arrangement has offered.
How Subsidy4India Can Help
Navigating the opportunities unlocked by the UK–India CETA requires more than awareness — it requires strategic positioning, understanding of origin rules, compliance with new regulatory frameworks, and identifying the right government schemes that complement FTA benefits.
At Subsidy4India, we help Indian businesses:
- Identify eligible government subsidies and grants that align with FTA-driven export opportunities
- Navigate schemes like the Export Credit Guarantee, PLI (Production-Linked Incentive), and Technology Development Fund
- Prepare proposals and documentation for funding applications linked to expanding exports
- Map your business to sector-specific opportunities under the UK–India CETA
Get in touch with us to understand which subsidies and funding programmes your business qualifies for as you look to expand into the UK market.
Source: Press Information Bureau, Government of India | UK Government – GOV.UK | UK Business & Trade
