Business EconomyPosted at: Jul 15 2026 3:41PM


India-UK CETA comes into force: Winners across Textiles, Pharma, Auto and IT

New Delhi, Jul 15 (UNI) India and the United Kingdom on Wednesday operationalised the Comprehensive Economic and Trade Agreement (CETA), a landmark pact expected to accelerate bilateral trade, improve market access for Indian businesses, and provide social security relief to thousands of professionals working in Britain. This historic deal eliminates tariffs on nearly 99 per cent of Indian exports to the UK.
The agreement comes into force alongside the Double Contribution Convention (DCC), a separate social security arrangement that exempts eligible Indian professionals on temporary assignments in the UK from making mandatory social security payments in both countries. The exemption period has also been increased from three years to five years.
The trade pact marks one of India's most comprehensive bilateral economic agreements, extending beyond tariff reductions to include services, investment, professional mobility, and regulatory cooperation.
Negotiations for the agreement began in 2021 under the India-UK Enhanced Trade Partnership and the Roadmap 2030 framework. After 14 rounds of negotiations, both sides concluded talks in May 2025, signed CETA in July 2025, and finalised the accompanying social security pact in February 2026.
A key feature of the agreement is the UK's decision to eliminate customs duties on a broad range of Indian exports. Products that previously attracted duties of up to 70 per cent—including processed foods, seafood, engineering goods, auto components, leather products, footwear, textiles, garments, chemicals and pharmaceuticals—will now enjoy duty-free access to the British market.
India, however, has shielded several politically and economically sensitive agricultural products from tariff commitments. Dairy products, cereals, millets, edible oils, oilseeds, apples, and several vegetables remain outside the scope of the agreement.
The timing of the pact is significant, as India remains a relatively small supplier to one of the world's largest import markets. Britain imported merchandise worth nearly USD 929 billion in 2025, but Indian shipments accounted for only USD 15.2 billion, or roughly 1.6 per cent of its total imports. Likewise, the UK absorbed only 3.4 per cent of India's global merchandise exports, leaving considerable room for expansion.
Industry experts believe the agreement could help Indian exporters gain a stronger foothold in sectors where the country's manufacturing capabilities align with Britain's import requirements.
The apparel industry is expected to be among the biggest beneficiaries. Although India exported garments worth USD 16.3 billion worldwide last year, its shipments to Britain stood at only USD 1.3 billion, representing just over six per cent of the UK's apparel imports. Duty-free access is likely to improve India's competitiveness against rival exporting nations.
Food processing companies may also gain from the pact. Despite Britain's annual processed food imports of USD 33.4 billion, India currently supplies only USD 354 million worth of products, translating into a market share of around one per cent.
The agreement could similarly benefit India's automobile sector. Britain imported auto products worth more than USD 92 billion in 2025, yet Indian exports accounted for only USD 325 million. While tariff elimination is expected to improve export prospects for vehicles, motorcycles, and components, exporters will still need to comply with the UK's technical standards and rules of origin.
Chemical, pharmaceutical and engineering exporters are also expected to receive a boost. India currently has a limited presence across these segments in the UK, despite being a major global exporter, and lower tariffs are expected to improve pricing competitiveness in the British market.
Beyond merchandise trade, CETA significantly expands opportunities for India's services sector. Britain has committed to market access across 137 services sub-sectors, opening new avenues for Indian companies operating in information technology, financial services, engineering, healthcare, education, consulting, telecommunications, and other professional services.
The agreement also simplifies temporary movement for business visitors, intra-company transferees, independent professionals, and contractual service providers. In a first for India under a trade agreement, the UK has also created an annual quota for 1,800 Indian chefs, yoga instructors, and classical musicians.
The accompanying Double Contribution Convention is expected to provide substantial cost savings for Indian companies with overseas operations. By preventing dual social security contributions for eligible employees on temporary assignments, the agreement is projected to benefit more than 75,000 Indian professionals and over 900 Indian companies operating in the UK.
Another important outcome of the negotiations relates to steel exports. According to the Ministry of Commerce and Industry, about 85 per cent of India's steel shipments to Britain will remain outside the scope of the UK's new safeguard measures. Products that fall under the restrictions will continue to receive access through tariff quotas and other agreed arrangements.
The government expects the agreement to generate gains across multiple sections of the economy. Export opportunities are likely to expand for farmers, food processors, and seafood exporters, while labour-intensive industries such as textiles, leather, and footwear could witness higher production and employment.
Officials also expect the pact to improve opportunities for MSMEs, startups, women-led enterprises, and professional service providers by enabling easier integration into UK supply chains and strengthening access to one of the world's largest consumer markets.
UNI VK RSA
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