By Dipak Kurmi
In a significant moment that marks a turning point in Indo-British relations, India and the United Kingdom have signed the Comprehensive Economic and Trade Agreement (CETA), one of the most ambitious free trade agreements in India’s recent history. The agreement, inked after over three years of intense negotiations, is hailed as a milestone for both nations, promising to double bilateral trade from the current $56 billion to an estimated $120 billion by 2030. It is more than a trade deal; it is a strategic framework that seeks to deepen economic, political, and cultural ties between two nations bound by a shared colonial past and a modern strategic vision.
Signed in the presence of Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer at the historic Chequers residence in Buckinghamshire, the agreement has been lauded as comprehensive, mutually beneficial, and forward-looking. CETA arrives at a time when global trade dynamics are rapidly evolving, with countries like the US reshaping trade flows through bilateral deals and protectionist policies. Against this backdrop, the India-UK agreement stands out as a model of cooperative globalization, rooted in mutual respect and economic pragmatism.
Unpacking the Deal: Market Access and Tariff Reductions
The essence of the CETA lies in its scope and depth. India has agreed to lower its high tariff walls, often cited by countries like the US as protectionist barriers. Currently, India’s average applied tariff stands at 17%, with agricultural tariffs as high as 39%. Under the CETA, average tariffs on British goods will drop dramatically—from 15% to just 3%—unlocking access for British exporters to one of the world’s most populous and fastest-growing consumer markets.
Simultaneously, the UK will offer unprecedented duty-free access to 99% of Indian exports, including labour-intensive products such as textiles, leather goods, garments, gems and jewellery, auto components, and engineering goods. This near-total tariff elimination is expected to significantly boost India’s manufacturing and export-oriented small and medium enterprises (SMEs), particularly in the MSME sector, which is central to India’s employment generation strategy.
One of the major talking points has been the concessions on Scotch whisky and luxury cars—products emblematic of British exports. Tariffs on whisky, which currently stand at a staggering 150%, will be immediately halved and eventually brought down to 40% over the next decade. Duties on high-end automobiles will fall from over 100% to 10%, subject to quotas. These reductions are expected to make UK products more competitive in the Indian market, while simultaneously addressing long-standing demands from British exporters.
Conversely, India has successfully safeguarded its agricultural sensitivities. Dairy products, apples, and cheese—sectors where domestic producers face competitive pressures—have been excluded from the agreement, allowing New Delhi to hold firm on its agricultural red lines while still expanding market access across a wide spectrum of processed and ready-to-eat agri-products.
A Boon for Agriculture, Marine, and Plantation Sectors
India’s agricultural and food processing sectors are expected to receive a substantial boost. Over 95% of agricultural and processed food tariff lines will now attract zero duty in the UK. Fruits, vegetables, cereals, turmeric, cardamom, pulses, mango pulp, pickles, and ready-to-eat food items will gain unfettered access to a premium market. This is projected to increase India’s agri-exports by over 20% in the next three years, contributing to its ambitious target of achieving $100 billion in agri-exports by 2030.
The marine products sector—another high-potential area—will benefit immensely from the elimination of UK tariffs. Despite the UK’s marine import market being worth $5.4 billion, India’s current share is a mere 2.25%. Existing UK tariffs on Indian shrimp, ranging from 4.2% to 8.5%, will now be removed, paving the way for India to scale up exports of shrimp, tuna, fishmeal, and aquaculture feeds significantly.
The plantation sector, especially instant coffee producers, is set to benefit from duty-free access to the UK. Indian businesses will now be better positioned to compete with European suppliers like Germany and Spain, opening new export opportunities for value-added coffee products, particularly Indian instant coffee, which has a loyal global consumer base.
Strengthening India’s Industrial Base
Perhaps one of the most transformative effects of CETA will be felt across India’s industrial sectors. The textiles and clothing industry—currently disadvantaged due to duty-free access enjoyed by Bangladesh, Pakistan, and Cambodia—will now be on equal footing. The agreement covers 1,143 tariff lines in this sector alone. Given that UK’s textile imports stand at $26.95 billion, while India exports only $1.79 billion worth of such goods to Britain, the potential for expansion is vast.
Engineering exports, already substantial at $4.28 billion to the UK, are expected to nearly double by 2029-30 due to tariff eliminations as high as 18%. Considering the UK imports over $193 billion in engineering goods annually, India’s current share remains modest, highlighting a robust opportunity for Indian manufacturers to scale up.
The pharmaceuticals and chemicals sectors are also key beneficiaries. While Indian pharma exports globally are valued at over $23 billion, exports to the UK are under $1 billion, despite the UK importing nearly $30 billion worth of pharma products. With the FTA eliminating tariffs and providing smoother regulatory processes, Indian generic drugmakers can significantly enhance their footprint in the UK. Additionally, medical devices such as diagnostic equipment, ECG machines, and X-ray systems will now be more competitive due to zero-duty access.
The chemicals sector is projected to witness a 30-40% increase in exports to the UK, reaching up to $750 million by 2025-26. This growth will be propelled by tariff eliminations and improved access for Indian firms in a high-value, innovation-driven market.
Services and Mobility: A Modern Pillar of Trade
Unlike many traditional trade agreements focused primarily on goods, CETA reflects the evolving nature of global commerce by placing significant emphasis on services and people-to-people mobility. India has secured major gains in digitally-delivered services, financial and professional services, education, and legal sectors. IT and IT-enabled services—India’s backbone in global trade—will benefit from improved market access and eased regulatory requirements.
One of the most strategic wins for India is the agreement on the Double Contribution Convention (DCC), under which Indian professionals working in the UK for up to three years will be exempt from paying social security contributions. This long-standing demand from Indian businesses will lower operational costs and increase the attractiveness of the UK for Indian service providers.
Furthermore, 1,800 visas per year will be provided to independent Indian professionals such as chefs, yoga instructors, and musicians. However, broader visa access and post-study work rights for students were not included, highlighting the limits of UK’s immigration flexibility. Still, the agreement marks a progressive step in facilitating the mobility of talent.
Investments and Strategic Vision: Beyond Trade
CETA is not just about trade. It reflects a strategic alignment between India and the UK. The deal was unveiled alongside the UK-India Vision 2035, which emphasizes collaboration in defence, cybersecurity, education, and technology—critical sectors for future economic security. London views India as a central partner in its Indo-Pacific vision post-Brexit, and this agreement underlines that geopolitical recalibration.
On investments, UK’s cumulative foreign direct investment (FDI) in India stood at $36 billion from April 2000 to March 2025, while Indian outbound FDI into the UK reached $20.2 billion. The agreement has already catalyzed business momentum: 26 British firms have announced new ventures in India, and a 16-member Indian delegation is engaging with British counterparts to explore further opportunities.
Yet, for the investment chapter to fully unlock its potential, a bilateral investment treaty (BIT) remains essential. Discussions are ongoing, and both governments are aware that this complementary agreement could accelerate capital flows and deepen investor confidence.
A Legacy Moment in a Complex Relationship
While the colonial legacy of the UK in India has long cast a shadow over bilateral relations, the past two decades have seen a strategic realignment based on mutual respect and shared goals. The signing of CETA is perhaps the clearest indication yet that both countries are ready to move forward with a new vision. It addresses historical imbalances and offers a platform for equitable economic engagement.
The agreement also sends a broader message to the world—that India is ready to integrate more deeply with global markets. It sets a precedent for negotiations with the European Union, where seven of the 23 chapters have already been agreed upon, and possibly with the United States in the future.
As Prime Minister Modi eloquently stated during the signing ceremony, this agreement is about “writing a new chapter” in Indo-UK relations. He likened it to cricket, acknowledging that while there may be the occasional swing and miss, the two nations are now playing with a “straight bat” toward a “high-scoring, solid partnership.”
The Comprehensive Economic and Trade Agreement between India and the United Kingdom is a game-changing pact. It promises to realign trade patterns, open new economic frontiers, empower sectors from agriculture to AI, and reinvigorate a relationship steeped in history with renewed economic purpose. With political will, business enthusiasm, and societal support, CETA could well be the cornerstone of a new global economic era for both nations.
(The writer can be reached at dipakkurmiglpltd@gmail.com)
