The Comprehensive Economic and Trade Agreement between India and the United Kingdom came into force on Wednesday, marking a significant milestone in economic relations between the two nations. The deal aims to lower tariffs on a wide array of products, thereby opening new avenues for businesses and professionals across both countries. For Indian exporters, this agreement provides duty-free access to most British tariff lines, which is expected to bolster sectors including textiles, leather, footwear, marine products, gems and jewellery, and processed foods. With British tariffs previously ranging from 4% to 20%, Indian authorities anticipate that the deal will enhance export competitiveness.
On the other hand, the United Kingdom stands to benefit from increased access to India’s burgeoning market. The agreement outlines phased tariff reductions and quotas in sectors such as automobiles and silver, while also expanding opportunities in procurement, financial services, insurance, education, and professional services. Under the terms of the pact, Britain will immediately remove duties on 96.8% of tariff lines, which accounts for 97.7% of trade by value. India, in turn, will eliminate tariffs on 64.1% of tariff lines immediately, with gradual reductions on an additional 21%, while safeguarding sensitive sectors.
The trade relationship between India and the UK has been on an upward trajectory. In the fiscal year 2025-26, India exported goods worth $13.44 billion to the UK and imported goods valued at $11.68 billion. Furthermore, bilateral services trade in 2024 amounted to $35.44 billion, with India enjoying a services surplus of nearly $7.9 billion. Notably, the engineering sector in India is poised to be one of the primary beneficiaries of this agreement, with exports to the UK reaching $4.7 billion in 2025-26. Industry experts predict that this figure could surpass $7.5 billion by 2029-30.
The services aspect of the agreement covers 137 sub-sectors, including key areas like information technology, telecommunications, finance, business services, and education. An added benefit of the pact is the simplification of temporary entry rules for business travelers, investors, and professionals. Moreover, the Double Contribution Convention that complements the agreement exempts eligible Indian professionals and employers from contributing to Britain’s National Insurance system for up to five years, a move that could benefit approximately 75,000 workers and 900 employers.
The agreement also paves the way for enhanced government procurement opportunities in both countries. This development allows Indian companies to vie for contracts in the UK while offering reciprocal opportunities for British businesses within India. Overall, the agreement is a strategic step forward in strengthening the economic ties between India and the United Kingdom, promising mutual benefits and growth across various sectors.