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

The story so far:India and the U.K. signed a Comprehensive Economic and Trade Agreement (CETA) on Thursday, after having announced the conclusion of negotiations on the deal in May this year. With negotiations starting in January 2022, the deal marks a more than three-year effort to enhance bilateral trade between the two countries.

What has broadly been agreed to?

Under the deal, the U.K. has removed tariffs on 99% of its product lines. However, not all of these product lines are exported by India to the U.K. According to an analysis by the Global Trade Research Initiative, about $6.5 billion or 45% of what India currently exports to the U.K. — such as textiles, footwear, carpets, automobiles, seafood, and fresh fruits such as grapes and mangoes — will now enter the U.K. duty-free. The remaining $8 billion worth of goods that India exports to the U.K. — petroleum, pharmaceuticals, diamonds, and aircraft components — already enjoy zero duty access. India has agreed to either eliminate or reduce duties on 90% of its tariff lines, which comprises about 92% of what the U.K. exports to us, according to data with the U.K. government. Alcohol from the U.K., especially whiskey, is set to become cheaper in India, as are British cars, and engineering products.

The U.K. is a relatively small trading partner for India. About 3.3% of India’s exports in 2024-25 went to the U.K., and the U.K. made up 1.2% of India’s imports that year.

Is the deal restricted to the goods trade?

No, the CETA incorporates a significant section on services, which is especially of interest to India since services exports are a vital engine of growth. Under the ‘economic’ component of the deal, India has agreed to open up some key sectors of its service economy to U.K. firms, such as accounting, auditing, financial services, telecom, and environmental services.

What this means is that U.K. companies operating in these sectors can offer their services to Indian customers without first having to establish a local presence here. Despite this, they will be treated at par with Indian firms. India has also agreed to recognise U.K. professional qualifications in law and accounting, but not in legal services.

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.

One major positive for India arises out of the Double Contribution Convention (DCC), which is a parallel agreement between the two countries that was negotiated simultaneously, and that will come into force when the CETA does. Under the DCC, the U.K. will allow 75,000 Indian workers on short U.K. assignments to continue paying into India’s social security system without also having to pay the same in the U.K. This is highly beneficial for Indian workers in the U.K. since many of them work there for so short a stint that they do not get to avail of the benefits of social security there while having to contribute to it.

Is the deal a standard one or does it include unusual aspects?

While the broad contours of the deal are pretty standard, dealing with tariff and non-tariff barriers, there are some aspects that are unusual. The first is to do with auto tariffs. India has, for the first time, included cuts in its tariffs on imported cars in a trade deal.

Large-engine luxury petrol cars imported into India from the U.K. will see their import duty cut to 10% over 15 years from the current maximum of 110%. However, this is subject to a quota starting at 10,000 units and rising to 19,000 in the fifth year of the deal. For mid-sized cars, the tariff has been cut to 50% subject to a quota, which will fall to 10% by year five.

Small cars will enjoy a similar tariff reduction and growing quota.

The idea behind the quota, according to government sources, is to allow the domestic industry enough time to prepare to compete with U.K. imports. Further, nascent industries such as electric vehicles have been further protected with no duty concessions being given for electric, hybrid, and hydrogen-powered vehicles for the first five years.

The other unusual aspect of the deal is that U.K. firms will now be allowed to participate in Indian central government procurement bids. India will open about 40,000 high-value contracts from central ministries and departments in sectors such as transport, green energy, and infrastructure.

So what next?

The deal does not come into effect immediately. It needs to be ratified by the Parliaments of both countries, a process that could take as long as six months to a year. For India, the deal also serves as a template for future deals with other economies, such as the U.S. and the EU, both of which are in various stages of negotiation.

Published – July 27, 2025 05:00 am IST