The story so far: The India-U.K. Comprehensive Economic and Trade Agreement (CETA) came into effect on July 15, a year after it was signed. Coupled with this agreement, the Double Contribution Convention (DCC) also comes into effect at the same time. The deal has been hailed by both sides, with Commerce Secretary Rajesh Agrawal even saying it is the “gold standard” of India’s free trade agreements.
What does India get in terms of trade benefits?
While speaking to the media a day before the deal went into force, Mr. Agrawal said the CETA stood out not just because of its breadth, but also its depth. That is, not only does it cover a wide range of tariff and non-tariff issues, but it also yields deep concessions within several of these issues.
As per the deal, the U.K. will immediately on implementation eliminate tariffs on 96.8% of its tariff lines, accounting for 97.7% of the trade value. That is, these tariffs have gone down to zero as of July 15. An additional 2% of tariff lines, amounting to 1.8% of trade value, will see reduced tariffs based on quotas. In total, this covers 98.8% of tariff lines and 99.5% of trade value.
Apart from tariffs, the 30 chapters of the CETA also cover digital trade, government procurement, small and medium enterprises, innovation, labour, environment, and gender. They also address non-tariff barriers such as Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) so that they do not become insurmountable trade restrictions in the future.
How else does India benefit from the deal?
One big win for India is the DCC. Under this deal, Indian workers in the U.K. and their employers will no longer need to pay social security in the U.K. if that payment is being made in India. The duration of this relief was initially set at three years when the deal was signed in July 2026 but was revised to five years.
The problem was that Indian workers in the U.K. were paying social security in India as well as in the U.K. Most Indian workers in the U.K. are there for short periods of up to five years. However, under U.K. laws, the benefits from social security can be availed by a worker only after 10 years of contributions. As a result, Indian workers would make the payments, but return to India before they could avail the benefit.
The five-year relief under the DCC means that about 90% of Indian workers in the U.K. will no longer have to part with about 23% of their salaries towards U.K. social security, as long as they are paying social security in India. According to Mr. Agrawal, this will benefit more than 75,000 Indian workers and more than 900 employers.
The CETA also incorporates a significant section on services, which is of considerable interest to India since services exports are a vital engine of growth. The U.K. has agreed to grant commercial presence rights to Indian companies in sectors such as computer services, consultancy, and environmental services. This means Indian companies operating in these sectors can set up branches, subsidiaries, or representative offices in the U.K.
What does the U.K. gain?
The U.K. stands to gain significantly in terms of market access in both goods and services, even as India has sought to protect its sensitive sectors from foreign competition.
India will immediately eliminate tariffs on 30.3% of the trade value, with 47% more seeing tariffs eliminated in a phased manner. It will also provide reduced quota-based tariffs on 12.1% of the trade value. In total, this would cover 89.5% of tariff lines and 89.4% of trade value.
In terms of popular U.K. products, alcohol from the U.K., especially whisky, is set to become cheaper in India, as are British cars, and engineering products.
India has also agreed to open up some of its key service sectors to U.K. firms, such as accounting, auditing, financial services, telecom, and environmental services. This means that U.K. companies in these sectors can offer their services to Indian customers without first having to establish a local presence here. That is, even without a local office, they will be treated at par with Indian firms. India has also agreed to recognise U.K. professional qualifications in law and accounting.
Are there any unusual aspects of the deal?
Apart from its breadth and depth, the India-U.K. CETA stands out for two other reasons: automobile tariffs and government procurement.
This deal is the first to include cuts to tariffs on auto imports by India. The Directorate General of Foreign Trade on July 10 notified the tariffs that would be imposed on auto imports from the U.K.
In the first year, a total of 20,000 completely built units (CBUs) of petrol and diesel passenger vehicles will be allowed for import from the U.K. at concessional rates of 30-50%, depending on the size of the car, down from the normal import duty of between 66-110%.
The quota will gradually increase to 37,000 such vehicles by year five of the deal, before once again gradually falling to 15,000 by year 15 and beyond. The tariffs on these in-quota vehicles will fall to 10% in year five and remain there. There are separate quotas and tariffs for alternative fuel passenger vehicles and commercial vehicles.
The other unusual aspect of the deal is to do with government procurement. The U.K. firms will now be allowed to participate in Indian Central government procurement bids. However, the U.K. firms can participate only as Class-II local suppliers in eligible tenders.
Indian suppliers, on the other hand, will continue to receive Class-I local supplier preference in the U.K. However, the U.K. market access will be limited to non-sensitive Central government entities and utilities, excluding central PSUs and State/local government procurement.
According to the Ministry of Commerce, this provides Indian suppliers legal access to the U.K. government procurement market worth around 90 billion pounds ($122 billion). India is providing reciprocal opportunities of around $114 billion.
Published – July 15, 2026 11:34 am IST
