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

New Delhi:

British Foreign Secretary David Lammy on Wednesday began a two-day visit to India to galvanise negotiations for an ambitious Free Trade Agreement and reset the overall bilateral partnership in crucial areas such as clean energy, new technologies and security.

As he embarked on the high-profile trip, Mr Lammy described the negotiations for the trade deal as the floor and not the ceiling of the ambitions to unlock shared potential and deliver growth.

The British foreign secretary’s visit to New Delhi is the first high-level engagement between India and the UK after Prime Minister Keir Starmer’s Labour government came to power on July 5.

“India is the emerging superpower of the 21st century, the largest country in the world with 1.4 billion people and one of the fastest growing economies in the world,” Mr Lammy said.

“Our Free Trade Agreement negotiations is the floor not the ceiling of our ambitions to unlock our shared potential and deliver growth, from Bengaluru to Birmingham,” he said.

A British government readout said, Mr Lammy will push for a “reset” of the UK-India partnership, including through reinforcing London’s commitment to securing a free trade agreement that will benefit both economies.

It said the foreign secretary will also galvanise support for accelerated action on the climate crisis with India as an “indispensable partner”, driving forward the clean energy transition and creating opportunities for British and Indian businesses.

He will discuss partnering on Indian-led global initiatives to build clean power access, climate resilience in the global south and small island states, it said.

“We have shared interests on the green transition, new technologies, economic security and global security,” Mr Lammy was quoted as saying in the readout.

“I am travelling to India in my first month as Foreign Secretary because resetting our relationship with the Global South is a key part of how this government will reconnect Britain for our security and prosperity at home,” he said.

In a post on ‘X’, External Affairs Ministry spokesperson Randhir Jaiswal said Mr Lammy’s visit will strengthen the comprehensive strategic partnership between the two countries.

Mr Lammy and External Affairs Minister S Jaishankar will hold wide-ranging talks this evening that is expected to focus on the FTA and New Delhi’s concerns over activities of pro-Khalistan elements in Britain, people familiar with the matter said.

The British foreign secretary is also scheduled to meet Commerce Minister Piyush Goyal during which both sides are likely to reaffirm their commitment to the proposed free trade pact, they said.

It is learnt both sides have already agreed on almost 90 per cent of the trade pact but the remaining 10 per cent comprised several sticky issues such as import duties on automobiles and scotch whisky and visas for business people.

The British readout said Mr Lammy will highlight the importance of a new partnership with India that focuses on economic, domestic and global security.

Economic, domestic and global security will be at the heart of the foreign secretary’s first visit to India as he travels to New Delhi to unlock the full potential of the UK-India partnership.

He will tell his Indian counterpart that he wants to drive forward greater growth for both countries, it said.

The foreign secretary will underscore the importance of the “living bridge” between the UK and India.

It represents the 1.7 million people with Indian heritage that have made their home in the UK and make an exceptional contribution to British life, the readout released by the UK high commission in New Delhi said.

“In a visit to India’s third largest technology company, the Foreign Secretary will meet business leaders to highlight how the UK and India are working together on shared ambitions such as cutting-edge science to encourage innovation, boost trade, and improve the livelihoods of working people in both countries,” it said.

The foreign secretary will also hold high-level talks with members from the Indian government, including Jaishankar, it said.

Mr Lammy will reiterate the extraordinary contribution of British Indians, saying that they enrich the UK’s social and economic landscape and are the epitome of modern Britain, it added.

In their talks, Jaishankar and Mr Lammy are also expected to review the implementation of the India-UK roadmap that seeks to broad-base the ties in a range of areas.

In 2021, India and the UK adopted the 10-year roadmap to expand ties in key areas of trade and economy, defence and security, climate change and people-to-people connections among others.

Mr Jaishankar and Mr Lammy are also likely to deliberate on pressing global challenges, including the Russia-Ukraine conflict and the situation in the Middle-East.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

London:

Britain’s Prime Minister Rishi Sunak has said the country is working towards a trade deal with India, but that reaching a final agreement was “not a given”, the Daily Mirror reported on Friday.

Rishi Sunak arrived in Delhi on Friday for the annual G20 Summit, where he and Prime Minister Narendra Modi plan a separate meeting including on ongoing trade talks.

“We’ve been working towards an ambitious and comprehensive free trade deal, but it’s not a given. These things are a lot of work and a lot of time,” Mr Sunak is reported by the Mirror to have said during his journey to India.

“We need to end up with something that works genuinely for both sides.”

Negotiations began in January 2022 and have already missed several political deadlines. But recent comments from both Britain and India have suggested progress continues to be made.

“Lots of progress has been made on this one, but we’re not there yet so we’ve got to keep going,” Rishi Sunak told reporters in a later interview broadcast from New Delhi. “We can’t rush it, and I won’t rush it.”

Ahead of the visit, the UK PM said London had no plans to change its approach to cutting net migration in order to help secure a deal with New Delhi.

A British source close to the negotiations told news agency Reuters in July that talks between the two countries had gained momentum but that further work was needed on services and tariffs to secure a deal.

A top Indian trade ministry official said later in July that both countries could sign the trade deal this year as they have reached consensus on the broad contours.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)