CETA: How the India-UK trade deal came of age

British firms gain access only to selected non-sensitive procurement opportunities as Class-2 suppliers under clearly defined conditions

India, in turn, eliminates tariffs immediately on 64.1 percent of tariff lines and phases out duties on another 21 per cent over time

At the stroke of midnight on 15 July 2026, one of the world's most closely watched trade negotiations quietly entered a new phase. The India-UK Comprehensive Economic and Trade Agreement (CETA), together with the Double Contribution Convention (DCC) on social security, came into force, reducing tariffs on thousands of products, opening new services markets and establishing a modern framework for investment, mobility and innovation.

For a relationship once defined by history, the agreement marks a decisive shift towards a future anchored in commerce. Bilateral trade, currently valued at nearly US$56 billion, is now expected to double to US$100-120 billion by 2030.

A Five-Year Journey

The foundations of CETA were laid during the India-UK Virtual Summit in 2021, when Prime Ministers Narendra Modi and Boris Johnson launched the Enhanced Trade Partnership and adopted the India-UK Roadmap 2030, elevating bilateral ties to a Comprehensive Strategic Partnership and committing to negotiate a comprehensive free trade agreement.

Formal negotiations began in January 2022 and unfolded over fourteen intensive rounds across New Delhi and London. Progress was often difficult. Sensitive issues-including mobility, Scotch whisky duties, automobile tariffs, carbon border measures and market access-repeatedly slowed negotiations. Elections in both countries effectively paused talks through much of 2024 before Prime Ministers Narendra Modi and Keir Starmer agreed to revive them on the margins of the G20 Summit in Rio de Janeiro later that year.

Negotiators concluded the agreement on 6 May 2025. Commerce Minister Piyush Goyal and UK Business Secretary Jonathan Reynolds signed the treaty in London on 24 July 2025 in the presence of both Prime Ministers. As envisaged in a side letter to the agreement, the Double Contribution Convention followed on 10 February 2026.

Even then, implementation faced one final obstacle. The UK's proposed steel safeguard quotas threatened to undermine market access for Indian exporters. A negotiated compromise-providing duty-free access for roughly 85 percent of eligible Indian steel exports alongside an enhanced country-specific quota for the remainder-cleared the final hurdle, allowing both agreements to enter into force in July 2026.

CETA is widely regarded as India's most ambitious trade agreement to date and is increasingly described as the country's "gold standard" FTA. Spanning 30 chapters, it extends well beyond tariff reductions into areas such as services, innovation, digital trade, public procurement, intellectual property, labour, environment and gender.

It is India's first comprehensive free trade agreement negotiated from scratch with a G7 economy under its recalibrated trade strategy of engaging with complementary economies and expanding India's share in global trade.

Firsts in India's trade policy.

For the first time in any free trade agreement, India has agreed to provide tariff concessions on fully built automobiles-an area long sought by British and European negotiators. It also marks India's first calibrated opening of its public procurement market through carefully designed asymmetric thresholds that continue to safeguard MSMEs and the Make in India programme.

The agreement also contains dedicated chapters on Intellectual Property and Innovation, aimed at strengthening India's innovation ecosystem while preserving flexibilities on public health and reaffirming commitments under the Doha Declaration. Dedicated chapters on MSMEs and Trade and Gender Equality recognise the challenges faced by smaller businesses and women entrepreneurs and establish institutional mechanisms for continued cooperation.

Equally noteworthy is the inclusion of Labour and Environment chapters-areas long regarded as sensitive in India's trade negotiations. Importantly, these chapters are collaborative rather than punitive and remain outside the agreement's dispute settlement mechanism.

Trade Gains Across Sectors

The commercial gains are substantial.

The UK eliminates tariffs immediately on 99 percent of India's tariff lines, covering almost the entire value of bilateral trade. Labour-intensive sectors stand to benefit the most. Indian exports of textiles and apparel, leather and footwear, marine products, gems and jewellery, engineering goods, auto components, chemicals, spices, tea, coffee and processed foods will now enjoy virtually duty-free access to the British market.

India, in turn, eliminates tariffs immediately on 64.1 percent of tariff lines and phases out duties on another 21 percent over time. British exports of Scotch whisky, gin, premium automobiles, cosmetics, chocolates, medical devices and advanced machinery are among the principal beneficiaries.

Scotch whisky duties will decline from 150 percent to 40 percent over ten years, while tariffs on automobiles will reduce from 110 percent to 10 percent under an expanding tariff-rate quota. The quota begins at approximately 20,000 vehicles annually before increasing to around 37,000 by the fifth year. Electric and hybrid vehicles become eligible only from the sixth year, providing domestic manufacturers valuable adjustment time. The quota is also divided across price bands, ensuring that most imports remain concentrated in luxury segments where domestic manufacturing is limited.

Services and Mobility: India's Competitive Edge

Services-India's greatest comparative advantage-feature prominently.

The UK has committed market access across 137 of 164 GATS subsectors, while India has undertaken commitments in around 108 subsectors covering information technology, financial services, telecommunications, engineering, accounting, education and healthcare. Dedicated chapters on Financial Services and Telecommunications further deepen cooperation in these sectors.

Mobility provisions facilitate the temporary movement of business visitors, intra-corporate transferees and contractual service suppliers for periods ranging from 90 days to three years without numerical quotas. An annual quota of 1,800 visas for chefs, yoga instructors and musicians also recognises India's growing cultural and creative economy.

The accompanying Double Contribution Convention is equally significant. By exempting temporary Indian workers in the UK from double social security contributions for up to five years-the longest exemption India has secured under any bilateral arrangement-it substantially lowers costs for Indian professionals and service providers.

Together, the mobility provisions and the DCC create a favourable environment for India's globally competitive services sector and reinforce India's position as a preferred destination for Global Capability Centres.

Protecting Sensitive Interests

Despite its ambition, the agreement reflects careful calibration.

India has excluded dairy, poultry, sugar, edible oils, apples, walnuts, gold bars, selected smartphone categories and certain information technology products from tariff concessions, protecting vulnerable agricultural sectors and strategic manufacturing supported under the Make in India and Production Linked Incentive (PLI) programmes.

Sensitive concessions in automobiles and whisky are similarly moderated through tariff-rate quotas, price bands and long implementation timelines rather than immediate liberalisation. Nearly one-fifth of tariff concessions offered to the UK are phased over periods extending up to ten years, allowing domestic industry adequate adjustment while improving access to cost-effective inputs that strengthen India's manufacturing competitiveness.

India has also retained important policy flexibilities in intellectual property, particularly regarding public health safeguards, while maintaining a balanced approach to government procurement. British firms gain access only to selected non-sensitive procurement opportunities as Class-2 suppliers under clearly defined conditions.

Turning Market Access into Market Share

The agreement undoubtedly creates unprecedented commercial opportunities. Exporters in textile hubs such as Tirupur, Surat and Ludhiana, leather producers in Agra, seafood exporters along India's coastline and engineering manufacturers across the country now enjoy tariff advantages over competitors from Bangladesh, Vietnam and several other exporting nations.

Yet tariff preferences alone do not guarantee market success. Indian exporters must continue meeting stringent British standards on product safety, testing, certification, labelling and technical regulations. Encouragingly, both governments have committed to pursuing Mutual Recognition Agreements covering testing, certification and professional qualifications. Their successful implementation would significantly reduce compliance costs, improve regulatory certainty and facilitate smoother movement of professionals across sectors.

Looking back, CETA is as much a story of patient diplomacy as it is of trade liberalisation. Negotiating between two economies at different stages of development, with distinct regulatory systems, political priorities and domestic sensitivities, was never going to be straightforward.

Many of the outcomes required India to venture into areas that had never featured in its earlier trade agreements while carefully preserving policy space in sectors critical to its developmental priorities. Equally, the United Kingdom had to accommodate India's concerns as an emerging economy with priorities of inclusive growth and social justice, keeping in view the substantial market access to one of the fastest-growing economies of the world.

The negotiations have secured unprecedented market access for businesses of both sides. The realization of full potential of the agreement's promise will now depend on businesses, exporters, investors and innovators who can translate these new opportunities into sustained commercial success. If the negotiations were about opening doors, the next chapter will be about walking together confidently through them.

Nidhi Mani Tripathi is presently posted as Minister (Economic) in the High Commission of India in London and was the Chief Negotiator on the India-UK FTA.

Anant Swarup, formerly Additional Secretary in the Department of Commerce and presently Secretary General, FICCI. Views are personal.

The India-UK Comprehensive Economic and Trade Agreement (CETA) marks the beginning — not the culmination — of India’s latest trade journey. While the pact promises unprecedented market access, its true success will not be measured by tariff concessions on paper but by how effectively Indian businesses use it to expand exports, create jobs and move up the global value chain

Major highlights CETA

Core Trade & Market Access

• Grants duty-free access for nearly 99% of India's exports by value, significantly boosting competitive pricing.
• Major tariff reductions apply to textiles, leather, marine products, chemicals, and engineering goods.
• India protects its strategically important and labour-intensive domestic sectors with phased tariff reductions.

Professional Mobility & Services

• The UK provides access across 137 service sub-sectors, benefiting Indian IT, financial services, and healthcare.
• Creates a clearer path for temporary stays without numerical quotas or restrictive economic tests.

Social Security & Work Visas (DCC)

Exempts eligible Indian professionals on temporary assignments in the UK from paying double social security contributions for up to five years.

Investment & Next-Gen Chapters

Extends beyond traditional goods and services, embedding 30 chapters that cover digital trade, telecommunications, intellectual property, and government procurement.

Nidhi Mani Tripathi, Minister (economic) in the High Commission of India in London & was the Chief Negotiator on India UK FTA.; Anant Swarup, Former Additional Secretary in the Dept. of Commerce, Secretary General FICCI; Views presented are personal.