India and the United Kingdom have officially entered a new phase in their relationship by formalizing a Comprehensive Economic and Trade Agreement (CETA), marking India's 16th such pact. This landmark deal aims to significantly boost bilateral trade, targeting a volume exceeding $100 billion by 2030. The agreement promises easier market access for both countries, with approximately 99% of Indian exports set to gain tariff benefits. British products, including whisky, cars, medical devices, and cosmetics, are expected to become more affordable in the Indian market.

Prime Minister Narendra Modi, during his visit to the UK, emphasized that the deal extends beyond a mere economic partnership, envisioning it as "a blueprint for shared prosperity". UK Prime Minister Keir Starmer echoed this sentiment, highlighting the FTA's potential to generate jobs, stimulate investment, and foster economic growth in the UK.

Key Provisions and Benefits

• Tariff Reductions and Elimination: The FTA eliminates tariffs on key sectors for the UK, such as leather and apparel. For India, approximately 99% of tariff lines for goods exported to Britain will see tariffs at zero. The agreement stipulates that 90% of tariff lines will see reductions for British exports to India, with 85% becoming completely tariff-free within ten years.
• Boost to Key Sectors: The FTA is expected to boost key sectors such as textiles, leather, footwear, sports goods and toys, marine products, gems and jewelry, engineering goods, auto parts and engines, and organic chemicals.
• Automotive Sector Benefits: Tariffs on automobiles will decrease from 110% to 10% under a quota system.
• Duty-Free Access: India is set to gain from 99% duty-free access to the UK market, covering nearly all of the trade value with the United Kingdom. Key labor-intensive sectors—marine, textiles, chemicals, base metals—will now enjoy zero duties, down from rates as high as 20%.
• Chemical and Plastic Exports: India's chemical exports to the UK may rise by 30–40%, estimated to reach $650–750 million in 2025–26. In plastics, duty-free access opens up strong opportunities in high-demand segments like films, sheets, pipes, and kitchenware, helping India compete with key global suppliers.
• Professional Opportunities: The FTA provides a new edge for India's young professionals by exempting 75,000 Indian workers from UK social security payments for three years. It grants access to 36 service sectors without an Economic Needs Test for Indian firms and freelancers. Indian professionals can now work in the UK more easily. The deal allows temporary stay of Indian business visitors and contractual service providers, yoga instructors, chefs and musicians.
• Spirits: The agreement includes provisions to reduce levies on spirits, with whisky and gin duties decreasing to 75% initially, then to 40% by the tenth year.
• Geographical Indication (GI) Protection: Feni from Goa, artisanal wines from Nashik, and toddy from Kerala will now enjoy Geographical Indication (GI) protection and shelf space in high-end UK retail and hospitality chains.

Trade and Economic Impact

The bilateral trade between the two nations reached $21.9 billion in 2024, with projections indicating the agreement will enhance annual bilateral trade by £25.5 billion over the long term. The free trade agreement (FTA) may see a doubling of the bilateral trade from the current level of $56 billion by 2030. Duty-free access for about 99% of Indian exports unlocks nearly $23 billion in opportunities for labor-intensive sectors, marking a new era for inclusive and gender-equitable growth.

Public Health Considerations

While the FTA is largely viewed as positive, some concerns have been raised about its potential impact on public health in India. The FTA could pose a public health challenge for India. It will allow tariff-free entry — and thus lower prices — for U.K.-made food products such as biscuits, chocolates and soft drinks in India, many of which would fit into the categorization of High Fat, Sugar and Salt (HFSS), posing grave long-term health risks.

Exclusions

Items such as dairy, apples, and edible oils are excluded from tariff cuts. The agreement takes fully into account the interests of Indian producers of sensitive agricultural products like dairy products, vegetables, apples, edible oils, oats, etc, by keeping those tariff lines under the sensitive list.