The Comprehensive Economic and Trade Agreement between India and the United Kingdom officially took effect on Wednesday, marking a significant milestone in trade relations between the two nations. This pact aims to reduce tariffs on a wide range of products, thereby enhancing business and professional opportunities across both countries. Indian exporters stand to benefit from duty-free access to nearly all British tariff lines, which is expected to boost sectors such as textiles, leather, footwear, marine products, gems and jewellery, and processed foods. With British tariffs previously ranging from 4% to 20%, Indian officials anticipate a surge in exports due to increased competitiveness.
On the other hand, the United Kingdom will enjoy expanded access to India’s burgeoning market through a gradual reduction in tariffs and implementation of quotas in industries including automobiles and silver. The agreement also opens new avenues in areas like procurement, financial services, insurance, education, and professional services. Notably, Britain will immediately eliminate duties on 96.8% of its tariff lines, accounting for 97.7% of trade by value. Concurrently, India will cut tariffs on 64.1% of tariff lines right away and will progressively phase out duties on an additional 21%, while safeguarding sensitive sectors.
Trade between India and the UK has been on a steady rise in recent years. During the 2025-26 fiscal year, India exported goods worth $13.44 billion to the UK, while imports from the UK totaled $11.68 billion. The bilateral services trade reached $35.44 billion in 2024, with India enjoying a services surplus of almost $7.9 billion. The engineering sector in India is poised to be one of the major beneficiaries, with exports of engineering goods to the UK amounting to $4.7 billion in 2025-26, and industry experts predicting this figure could surpass $7.5 billion by 2029-30.
The agreement’s services component, encompassing 137 sub-sectors, covers key areas such as information technology, telecommunications, finance, business services, and education. It also eases the rules for temporary entry of business travelers, investors, and professionals. Additionally, the Double Contribution Convention associated with the agreement offers significant advantages by exempting eligible Indian professionals and employers from contributing to the UK’s National Insurance system for up to five years, benefiting approximately 75,000 workers and 900 employers.
Furthermore, the agreement opens up government procurement opportunities, allowing Indian firms to tap into contracts in the UK while providing reciprocal opportunities for British businesses in India. This comprehensive trade deal is set to strengthen economic ties and create new opportunities for growth and collaboration between the two countries.