The Comprehensive Economic and Trade Agreement between India and the United Kingdom, which came into effect on Wednesday, marks a significant step in enhancing bilateral trade relations. The pact is set to lower tariffs on thousands of products, facilitating expanded opportunities for businesses and professionals across both nations. Indian exporters will now enjoy duty-free access to most British tariff lines, offering a boost to sectors like textiles, leather, footwear, marine products, gems and jewellery, and processed foods. By eliminating these tariffs, which previously ranged from 4% to 20%, India anticipates a surge in its export competitiveness in the UK market.
On the flip side, the agreement provides Britain with increased access to India’s flourishing economy through phased reductions in tariffs and the introduction of quotas in several industries, including automobiles and silver. Furthermore, the accord extends opportunities in procurement, financial services, insurance, education, and professional services, fostering stronger economic ties. As part of the deal, Britain will immediately abolish duties on 96.8% of its tariff lines, which accounts for 97.7% of trade by value. India, in turn, will lift tariffs on 64.1% of tariff lines at once and gradually eliminate duties on an additional 21%, while safeguarding sensitive sectors.
Trade between India and the UK has seen consistent growth over recent years. In the fiscal year 2025-26, India exported goods worth $13.44 billion to Britain, while importing $11.68 billion. Moreover, bilateral services trade reached $35.44 billion in 2024, with India enjoying a services surplus of nearly $7.9 billion. The engineering sector in India stands to gain substantially from this agreement, with exports of engineering goods to Britain amounting to $4.7 billion in 2025-26. Industry leaders are optimistic, forecasting this figure could surpass $7.5 billion by the 2029-30 period.
The services aspect of the agreement encompasses 137 sub-sectors, including information technology, telecommunications, finance, business services, and education. The deal also simplifies rules for temporary entry for business travelers, investors, and professionals, further facilitating cross-border mobility. Additionally, the accompanying Double Contribution Convention benefits around 75,000 Indian professionals and 900 employers by exempting them from contributions to Britain’s National Insurance system for up to five years.
This landmark agreement also opens up government procurement avenues in both countries, granting Indian companies access to contracts within Britain while creating reciprocal opportunities for British businesses to engage in the Indian market. Overall, this trade agreement lays a foundation for a more robust economic partnership between India and the United Kingdom, promising mutual benefits and growth.