India's Commerce Secretary Rajesh Agarwal has declared the India-UK Comprehensive Economic and Trade Agreement (CETA) to be the country's "most aspirational" trade pact yet. The agreement, set to come into force on Wednesday, July 15, 2026, aims to establish a forward-looking economic framework between the two significant global economies.
Agarwal described CETA as a "gold-standard and first-of-its-kind FTA" due to its broad sectoral coverage and substantial reduction in both tariff and non-tariff barriers. The pact spans 30 chapters, covering critical areas such as trade in goods and services, digital trade, government procurement, MSMEs, innovation, labor, environment, and gender.
Extensive Tariff Liberalization
Under the new agreement, the United Kingdom has committed to liberalizing tariffs on 98.8% of tariff lines, encompassing 99.5% of the total value of Indian exports. A significant portion, 97.7% of this trade value, will immediately become duty-free, while a minor 0.5% remains excluded from tariff liberalization. Conversely, India's offer extends to 89.5% of tariff lines and 89.4% of trade value, with immediate tariff elimination on 30.3% of trade value, and the remaining reductions phased in over time.
The agreement promises duty-free access for numerous Indian export sectors currently facing UK duties. These include:
- Textiles and clothing (up to 12% duty)
- Leather and footwear (up to 16% duty)
- Gems and jewellery (up to 4% duty)
- Organic and inorganic chemicals (up to 8% and 4% duty, respectively)
- Auto parts (up to 18% duty)
- Mechanical and electrical machinery (up to 8% and 14% duty, respectively)
- Plastics and rubber (up to 6% duty)
- Surgical instruments (up to 6% duty)
- Aluminium and copper (up to 10% and 4% duty, respectively)
Major Indian exports to the UK that stand to benefit include electrical machinery ($2.13 billion), textiles and clothing ($1.94 billion), mechanical machinery ($1.34 billion), and gems and jewellery ($1.03 billion).
Key Provisions for Professionals and Businesses
A significant component of CETA is the Double Contribution Convention (DCC) on social security. This provision will exempt eligible Indian professionals and their employers from making social security contributions in the UK during temporary assignments. The Commerce Ministry anticipates this will benefit over 75,000 Indian workers and more than 900 employers.
Furthermore, the FTA introduces provisions for self-certification of origin, simplifying trade processes. Agarwal highlighted that the agreement also includes specific benefits for farmers, fishermen, workers, women entrepreneurs, youth, startups, and Micro, Small, and Medium Enterprises (MSMEs), alongside enhanced mobility commitments for professionals.
Boosting Bilateral Trade
According to the Commerce Ministry, bilateral goods trade between India and the UK reached $25.12 billion in FY26, with India's exports at $13.44 billion and imports at $11.68 billion. Bilateral services trade stood at $35.44 billion in 2024, comprising India's services exports of $21.66 billion and imports of $13.78 billion. The government's immediate focus is to ensure that consignments are dispatched under the FTA from day one, allowing exporters to promptly leverage preferential tariffs.