The India-U.K. Comprehensive Economic and Trade Agreement (CETA), which came into force on July 15, marks a pivotal moment in the evolution of bilateral ties. More than a conventional tariff-reduction pact, the agreement reflects a strategic alignment between two major democracies seeking to recalibrate their economic engagement in a rapidly shifting global order.
The India-U.K. CETA represents one of the most wide-ranging trade agreements concluded by India in recent years. Aligned with the broader India-U.K. Vision 2035, the CETA seeks to deepen cooperation across trade, technology, climate, and innovation. The agreement reflects the growing maturity of the India-U.K. economic partnership and provides a strong institutional framework for expanding trade and investment.
Both countries have further set a target of doubling bilateral trade to over $100 billion by 2030, an objective that now appears more achievable with the new institutional framework in place.
Gains for both sides
The headline gain for India is the zero-duty access secured for 99% of Indian exports to the U.K. This is expected to boost labour-intensive sectors such as textiles, leather, footwear, marine products, and gems and jewellery, which are sensitive to pricing. It will also benefit high-value sectors such as engineering goods and chemicals, where margins depend on consistent market access. Tariffs ranging from 70% on processed foods to 12% on textiles will now come down to zero.
The Indian government has also addressed concerns relating to steel exports. Recognising the U.K.’s new steel measures that came into effect on July 1, both sides have agreed on arrangements that protect commercial interests, minimise market disruptions, and provide greater certainty for Indian exporters. Moreover, the import of electric vehicles will be subject to tariff-rate quotas, with tariffs being reduced in a phased manner. This reflects India’s calibrated approach to balancing consumer access with continued support for domestic manufacturing. India has also retained appropriate safeguards in sensitive sectors such as agriculture and dairy.
The deal also opens access to government procurement markets, enabling Indian firms to bid for a wider range of public contracts in the U.K., especially in sectors such as infrastructure services and consulting.
Equally important is the agreement’s emphasis on services and professional mobility. Expanded access for Indian IT, education, healthcare, financial and professional service providers strengthens India’s position as a global services hub. The agreement also strengthens cooperation in education and skills by enabling U.K. institutions to establish campuses in India.
Modern provisions on digital trade, labour, gender, intellectual property, and innovation, make the agreement future-ready, enabling Indian firms to integrate into the U.K. and global value chains, while attracting investments for emerging sectors such as fintech and green technologies. These provisions will also create new opportunities for startups and Global Capability Centres to further advance collaboration in emerging technologies such as AI.
The U.K. is already India’s sixth-largest investor, contributing around 5% of cumulative FDI (Foreign Direct Investment) equity inflows into India since April 2000. The agreement is expected to further strengthen bilateral investment flows.
To maximise benefits from the CETA, the Indian industry must invest in quality upgradation, standards compliance, and sustainability. Indian companies should leverage mobility provisions to deepen their presence in the U.K. services market, build partnerships, and invest in long-term capabilities.
Again, with opportunities in sectors such as processed foods, textiles, handicrafts, and IT-enabled services and business services, industry bodies have a critical role to play in enabling Micro, Small, and Medium Enterprises (MSMEs) to benefit from the agreement. This requires guidance on compliance and regulatory requirements, as well as procurement opportunities.
Template for the future
At a time of rising regulatory barriers across the world, the India-U.K. CETA reaffirms the value of open, rules-based trade. It supports India’s Atmanirbhar Bharat vision by enhancing competitiveness and complements the Make in India and Digital India schemes through greater market access, services exports, and mobility. For the U.K., the agreement strengthens its strategic economic partnership with one of the world’s fastest-growing major economies.
Upon implementation, the CETA can reshape trade and investment flows, create quality jobs and growth, and transition India to a more competitive and innovation-driven economy thereby serving as a benchmark for trade agreements.
Furthermore, the India-U.K. CETA can also serve as a foundation for trilateral economic partnerships by combining India’s manufacturing strength and skilled workforce with the U.K.’s financial, technological, and global commercial networks. The U.K.’s membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, together with the proposed India-EU trade agreement, can further create complementary opportunities for Indian businesses to integrate into wider regional value chains, diversify exports, and strengthen supply chain resilience.
Chandrajit Banerjee is Director General, CII.
Published – July 22, 2026 01:23 am IST
