The India-UK Comprehensive Economic and Trade Agreement (CETA) came into effect on Wednesday, ushering in a new phase in bilateral trade by expanding market access for Indian exporters and gradually lowering the cost of several British products in India. Trade experts say the pact is expected to strengthen investment flows, boost manufacturing and services, and generate employment across key sectors.
For Indian consumers, the agreement is likely to make imported Scotch whisky, premium British automobiles, cosmetics, chocolates and selected food products more affordable over time. However, the most significant gains are expected to accrue to Indian exporters, who will benefit from broader access to the UK market.
Under the agreement, nearly 99 per cent of Indian exports to the UK will enjoy zero-duty access, covering almost the entire value of India's goods exports to Britain. Thousands of products that previously attracted import duties will now enter the UK duty-free, improving their competitiveness against goods from Europe, China and other countries.
Sectors expected to benefit the most include textiles and garments, leather and footwear, gems and jewellery, marine products, engineering goods, auto components, processed food, chemicals, pharmaceuticals and agricultural products.
Industry leaders believe the removal of tariffs will improve profitability, encourage higher production and create employment across India's manufacturing hubs.
"The India-UK Comprehensive Economic and Trade Agreement marks a pivotal milestone in India's global trade journey. While the UK is already India's fifth-largest merchandise export destination, it accounts for only around 1 per cent of India's merchandise imports, indicating significant headroom for a more balanced and diversified trade relationship. By lowering tariff barriers, improving market access, and simplifying cross-border trade, the agreement is expected to unlock new opportunities for Indian exporters, particularly MSMEs," Kaushal Sampat, President at Vayana, told NDTV.
Beyond merchandise trade, the agreement is expected to provide fresh opportunities for India's services industry.
Indian IT firms, consulting companies, engineers, architects, accountants, healthcare professionals and education service providers are expected to gain from easier market access and greater regulatory certainty in the UK. The pact covers 137 service sub-sectors, making it one of India's most comprehensive trade agreements focused on services.
"As trade volumes increase, ensuring timely access to working capital will be equally important to help businesses scale confidently and compete effectively in the UK market," Sampat added.
Another major feature of the agreement is the Double Contribution Convention (DCC), under which Indian professionals on temporary assignments in the UK for up to five years will no longer have to contribute to social security systems in both countries. The provision is expected to lower costs for employees and employers while improving the competitiveness of Indian businesses operating overseas.
Although consumers are unlikely to see immediate price reductions, several British imports are expected to become cheaper as tariff cuts are implemented in phases.
Products expected to benefit include Scotch whisky, gin, premium British cars, luxury motorcycles, cosmetics, chocolates, biscuits, medical devices and selected food items.
The tariff reductions will be gradual. Import duties on eligible British-made vehicles will decline over several years under a quota-based mechanism, while duties on Scotch whisky will also be reduced in stages rather than through an immediate cut.
The agreement is expected to significantly improve the competitiveness of premium British automobiles in India.
Until now, imported British cars attracted duties of up to 110 per cent, making them considerably more expensive. Under CETA, tariffs on eligible vehicles imported within specified quotas will be reduced progressively over the coming years.
The government has introduced safeguards, including annual import quotas and eligibility requirements, to ensure that domestic automobile manufacturers and India's expanding electric vehicle ecosystem remain protected.
While lower prices for luxury imports have drawn attention, economists say the broader economic impact will come from increased exports and stronger investment ties.
As the world's sixth-largest economy, the UK represents a major high-income market for Indian businesses. Easier access is expected to help Indian manufacturers diversify exports at a time when global trade is facing geopolitical uncertainty and slowing demand in several regions.
The agreement is also expected to encourage greater British investment in sectors such as manufacturing, financial services, renewable energy, education and technology.
"We are continuing to see that the India-UK corridor is not just a trade relationship; it is a strategic partnership leveraging innovation, resilience, and shared ambitions. With nearly all Indian mid-market firms planning UK expansion and UK businesses eyeing India for growth, this collaboration is set to thrive in the coming years across technology, clean energy, and advanced manufacturing," said Anuj Chande OBE, Grant Thornton Partner and Head of South Asia Business Group.
Industry body ASSOCHAM believes the trade agreement has the potential to significantly deepen economic ties between the two countries.
According to the organisation, bilateral trade could almost double to around $120 billion by 2030, supported by higher merchandise exports, expanded services trade and stronger investment flows.
"The agreement is expected to significantly benefit Indian sectors such as textiles, leather, marine products, gems and jewellery, engineering goods, and chemicals. Likewise, the UK is set to gain across key sectors, including automotive, beverages and spirits, life sciences, and healthcare," said Nirmal K Minda, President, ASSOCHAM.
Prime Minister Narendra Modi has described the agreement as a "historic milestone", saying it will create new opportunities for farmers, workers, MSMEs, startups and innovators while contributing to the vision of Viksit Bharat 2047.
The impact of the agreement will unfold gradually rather than immediately.
As phased tariff reductions take effect, premium British goods are expected to become more competitively priced in the Indian market. Trade experts, however, believe the larger and quicker benefits will come from higher exports, increased manufacturing activity, job creation and stronger foreign investment.
For India, CETA represents more than a conventional trade agreement. It marks a strategic step towards deeper integration with advanced global markets while giving Indian businesses greater access to one of the world's largest and most valuable consumer economies.
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