The Comprehensive Economic and Trade Agreement between India and the United Kingdom officially commenced on Wednesday, marking a significant step in lowering tariffs on numerous products and expanding business prospects for both nations. This landmark agreement offers Indian exporters duty-free access to most British tariff lines, particularly benefiting industries such as textiles, leather, footwear, marine products, gems and jewellery, and processed foods. Indian authorities anticipate this will enhance export competitiveness by eliminating British tariffs that previously ranged from 4% to 20%.
On the British side, the agreement facilitates broader access to India’s burgeoning economy through phased tariff reductions and quotas in sectors like automobiles and silver. It also broadens opportunities in procurement, financial services, insurance, education, and professional services. As part of the pact, the UK will immediately remove duties on 96.8% of tariff lines, covering 97.7% of trade by value. Concurrently, India will eliminate tariffs on 64.1% of tariff lines right away while gradually phasing out duties on an additional 21%, ensuring protection for sensitive sectors.
Trade between India and the UK has shown consistent growth in recent years. In the fiscal year 2025-26, India exported $13.44 billion worth of goods to Britain and imported $11.68 billion worth of goods in return. The bilateral services trade reached $35.44 billion in 2024, with India enjoying a services surplus of nearly $7.9 billion. A notable beneficiary of the agreement is India’s engineering sector, which exported $4.7 billion in engineering goods to the UK in 2025-26. Industry leaders project this figure to surpass $7.5 billion by 2029-30.
The agreement’s services component encompasses 137 sub-sectors, including information technology, telecommunications, finance, business services, and education. It also streamlines temporary entry rules for business travelers, investors, and professionals. A key aspect of the deal is the Double Contribution Convention, which exempts eligible Indian professionals and employers from contributing to Britain’s National Insurance system for up to five years, benefiting around 75,000 workers and 900 employers.
Additionally, the agreement opens up government procurement opportunities in both nations, granting Indian firms access to contracts in the UK and creating reciprocal opportunities for British businesses in India. This comprehensive trade agreement is poised to bolster economic ties, fostering increased trade and investment between India and the United Kingdom.