It was touted by officials on both sides as the most important bilateral trade agreement since Brexit with important implications not only to businesses but also consumers.

Trade Growth & Economic Impact

• Trade Surge: bilateral trade is likely to increase by more than 5 times to approximately $120billion in 2030.
• UK Gains: Increased annual growth by 4.8 billion pounds and wage increases by 2.2 billion pounds of the UK employees.
• MSME Benefit: It is believed that small and medium exporters of India will benefit a lot particularly in labour intensive products such as textile, gems and sea products.

Tariff Reductions: What Becomes Cheaper?

For Indian Exports to the UK

• Duty‑free access for 99% of Indian goods, including textiles, auto parts, spices, seafood, leather, chemicals, and pharmaceuticals.
• Removal of UK tariffs on key exports makes Indian goods more competitive in a premium European market.

For UK Exports to India

• India will eliminate duties on 90% of UK tariff lines, with 85% becoming fully duty-free in 10 years.
• Steep reductions include:
  
• Whisky & gin: from 150% to 75% now, 40% by Year 10
  
• British cars: from over 100% to just 10% under quota limits
  
• Medical devices, fashion, salmon, chocolates, cosmetics: significant cuts follow.
  

Sectors Benefiting Most

Services Mobility & Jobs

• Indian professionals in IT, engineering, healthcare, education, and creative fields can work in the UK for up to two years with easier visa access and no need for a local office.
  
• 75,000 Indian workers (e.g. musicians, chefs, yoga teachers) will benefit from exempt social security payments for three years, saving both employers and employees money.
• The FTA opens up public procurement opportunities (tenders worth 40,000 contracts or ₹4.09 lakh crore annually) to UK firms in non-sensitive sectors.

Challenges & Risks to Watch

• Carbon Border Tax: UK carbon-adjustment policies risk imposing extra tariffs on Indian steel, aluminum, and fertiliser exports from 2027 onward, costing an estimated USD 775 million annually.
• Bilateral Investment Treaty (BIT) discussions remain unresolved—India seeks regulatory control while the UK pushes for investor protections.
• MSME Readiness: Many small exporters may struggle with compliance around rules of origin, sustainability standards (e.g., BCI, OEKO‑TEX), and documentation requirements.

Why It Matters

• Deepens Economic Ties: The agreement reflects a strategic pairing between two vibrant economies post-Brexit, boosting trade, innovation, and diaspora connections.
• Blueprint for Future Deals: Seen as a model for India’s upcoming trade agreements with the EU and US—particularly in services, digital trade, and procurement policies.

When Will It Take Effect?

The deal will come into force within the next 6–12 months, after approvals from both Indian and UK legislatures and implementation of key regulatory steps.

Final Thoughts

The India–UK CETA trade deal is a major milestone that promises to reshape bilateral commerce. With sweeping tariff reductions, new access to service markets, and streamlined mobility for professionals, it boosts opportunities on both sides. While risks remain—such as compliance burdens and carbon tax disputes—the agreement’s benefits appear significant for Indian exporters, MSMEs, professionals, and UK businesses alike.

Stay tuned as CETA moves through ratification and begins changing markets across sectors from textiles and seafood to engineering, pharma, and professional services.

FAQ

Q1: Will Indian textiles be duty-free in the UK?
Yes—99% of Indian exports, including textiles, will enter the UK duty-free, increasing competitiveness for Indian MSMEs.

Q2: How much will whisky tariffs drop in India?
From 150% to 75% immediately, and further down to 40% over the next 10 years.

Q3: Can Indian professionals work in the UK without social security taxes?
Yes—for up to three years under the Double Contribution Convention.

Q4: Will UK firms get access to Indian government contracts?
Yes—UK companies can bid on non-sensitive central government contracts worth over ₹2 billion each, via platforms like GeM.