What’s in the India-UK trade deal and why it matters for exporters

By: Shantanu Bhattacharji

The deal is expected to attract more foreign investment, broaden market access, and improve job prospects for skilled Indian workers—reflecting a shared effort to update trade ties in a rapidly changing global economy.

India and the United Kingdom have signed a new trade agreement that could reshape the flow of goods and services between the two countries. Known as the Comprehensive Economic and Trade Agreement (CETA), the deal removes tariffs on nearly all Indian exports to the UK and gradually reduces duties on most British goods heading to India.

The agreement grants duty-free access to 99 per cent of Indian products entering the UK, a boost for sectors such as textiles, garments, footwear, and leather goods—industries that rely heavily on overseas markets and employ millions. In exchange, India will reduce or eliminate tariffs on 90 per cent of British exports over time.

This is welcome news for New Delhi’s labour-intensive manufacturing sector. Garments, for instance, once made up 17.4 per cent of exports to the UK in 2019–20, but that share fell to 9.8 per cent in 2024–25. Industry leaders hope the new deal will help Indian manufacturers regain lost ground in the British market.

The pact also covers services, a space where India has grown into a global powerhouse. New mobility provisions are expected to make it easier for Indian professionals—particularly in IT, finance, consulting, and healthcare—to work in the UK. For young engineers and tech talent, this could mean more access to international opportunities and longer-term visas.

Strategic Timing

The timing is no accident. The UK, post-Brexit, has been seeking new trade partners to replace its former European Union network. For India, the deal aligns with its broader strategy to diversify trade relationships amid shifting geopolitical dynamics and ongoing tensions with China.

India also holds a trade surplus with the UK, led by services such as software, legal, and business consulting. The agreement is expected to further strengthen this lead by lowering barriers and easing rules for cross-border professional collaboration.

Economists say the deal has the potential to attract more foreign investment, open up new markets, and improve job prospects for skilled Indian workers. It also signals a willingness from both countries to modernise their trade ties in a fast-changing global economy.

Sensitive Items Left Out

Still, the agreement stops short of full liberalisation. Electric, hybrid, and hydrogen vehicles will remain protected from tariff cuts for the first five years, reflecting India’s cautious approach to nurturing its clean mobility industry. Several other goods—such as apples, cheese, whey, smartphones, and gold bars—were also excluded from tariff concessions, a move aimed at safeguarding domestic producers.

Britain, in turn, has kept its own sensitive sectors off the table, including meat, rice, sugar, and eggs—products where UK farmers are vulnerable to foreign competition.

Whisky Concession Draws Attention

One of the more symbolic outcomes of the agreement is India’s decision to gradually reduce tariffs on imported British whisky, long a contentious issue in trade talks. Duties, which currently hover around 150 percent, will be lowered to 40 percent over the next decade. While alcoholic beverages represent only 2.5 to 4 per cent of India’s total imports from the UK, the move could open the door for more premium British brands in India’s growing spirits market.

The Road Ahead

While the deal opens new doors, its success will depend on how quickly businesses adapt to the new rules and whether lingering issues—like data protection, intellectual property rights, and sector-specific regulations—can be resolved.

Still, the agreement marks a clear shift in India’s trade posture. It deepens economic ties with a major Western economy and reflects growing confidence in India’s export competitiveness and services talent.

For now, Indian exporters and skilled workers stand to benefit. And for two countries with centuries of history, the deal signals a new chapter in economic cooperation—one built not on legacy, but on mutual opportunity in a changing world.