The recently formalized India-UK Comprehensive Economic and Trade Agreement (CETA) is poised to significantly boost exports from key Indian states through tariff reductions and enhanced access to the UK market. Signed in London on July 24, 2025, by Prime Minister Narendra Modi and British Prime Minister Keir Starmer, this landmark agreement aims to double bilateral trade to $112 billion by 2030. The deal ensures duty-free access to 99% of Indian exports to Britain, covering almost all trade categories, which will particularly benefit labor-intensive industries.

Key Benefits and Impact

The India-UK FTA is projected to deliver wide-ranging economic advantages by expanding trade in goods and services. It is expected to increase UK exports to India by nearly 60% in the long run, equivalent to an additional £15.7 billion of UK exports to India by 2040. Simultaneously, UK imports from India are expected to increase by 25%, which is equivalent to £9.8 billion. Overall, bilateral trade is expected to increase by nearly 39%, equivalent to £25.5 billion a year.

Tariff Reductions and Market Access

The FTA removes or reduces tariffs on 90% of tariff lines, covering 92% of India's goods imports from the UK in 2022 after staging. This includes key UK exports such as whiskies and gin, with tariffs falling from 150% to 75% upon entry into force and eventually to 40% after a 10-year staging period. Similarly, tariffs on UK car exports to India, which were as high as 110%, will fall to 10% within a specified quota.

India will also benefit from the elimination of tariffs on approximately 99% of tariff lines, covering nearly 100% of trade value. This offers opportunities to boost bilateral trade significantly. The UK is granting duty-free access to a diverse selection of products from India, including marine products, textiles and clothing, chemicals, and base metals.

Benefits for Key Sectors

Several key sectors in India are expected to benefit significantly from the trade pact:

• Textiles, Footwear, Gems and Jewellery: These labor-intensive sectors will gain from the elimination of duties by the UK, with tariffs reduced to zero from up to 20%.
• Marine Products: Coastal states like Andhra Pradesh, Odisha, Kerala, and Tamil Nadu will benefit from duty-free entry for products like shrimp, tuna, fishmeal, and feeds, which currently attract tariffs.
• Pharmaceuticals, Engineering Goods, Auto Components, and Organic Chemicals: Fast-growing sectors like these are also poised to gain from the agreement.
• Agriculture: Indian farmers will have access to the UK's £37.5 billion agricultural market, with approximately 95% of agricultural and processed food tariff lines eliminated.

Impact on Indian Consumers

Indian consumers will also benefit from reduced costs on imported goods from the UK. Tariffs will be reduced on various products, including:

• Whisky and gin, with import taxes being halved from 150% to 75% and further reduced to 40% over ten years.
• Automobiles, with tariffs falling from over 100% to 10% under a quota.
• Medical equipment and aerospace components.
• Soft drinks, beauty products, chocolates, and biscuits.

Strategic and Operational Advantages

Beyond tariff reductions, the FTA facilitates smoother customs processes, enhances mobility, and creates new opportunities in government procurement and digital trade. Transparent and efficient customs procedures, including simplified processes for qualified traders and support for digital trade through paperless procedures, are also part of the agreement.

Geopolitical Context

The India-UK trade deal is significant as it represents India's biggest strategic partnership with an advanced economy. It also serves as a potential template for future trade deals with the EU and other regions. The agreement reflects a strengthened relationship between the two countries, driven by a mutual desire for certainty in a world moving towards trade turmoil. The UK government has stated that the deal will reduce India's average tariff on British goods from 15 percent to 3 percent.

The India-UK CETA marks a significant step towards enhanced economic cooperation, promising increased exports, reduced tariffs, and greater market access for both nations.