The Comprehensive Economic and Trade Agreement between India and the United Kingdom took effect on Wednesday, marking a significant shift in trade relations by reducing tariffs on a wide range of goods and enhancing business and professional opportunities for both nations. This pact provides Indian exporters with duty-free access to the majority of British tariff lines, which stands to benefit industries such as textiles, leather, footwear, marine products, gems and jewellery, and processed foods. Indian officials anticipate that this will enhance their competitiveness in markets where British tariffs previously ranged between 4% and 20%.
Conversely, the United Kingdom is set to benefit from expanded access to India’s burgeoning economy, with phased tariff reductions and quotas in sectors like automobiles and silver. The agreement also broadens opportunities in procurement, financial services, insurance, education, and professional services. Under the terms of the agreement, the UK will abolish duties on 96.8% of its tariff lines, covering 97.7% of trade by value. India, on the other hand, will immediately lift tariffs on 64.1% of its tariff lines and will gradually eliminate duties on an additional 21%, while safeguarding sensitive sectors.
Trade between India and the UK has shown steady growth over recent years. During the fiscal year 2025-26, India exported goods valued at $13.44 billion to the UK and imported goods worth $11.68 billion. Bilateral services trade in 2024 reached $35.44 billion, with India holding a services surplus of nearly $7.9 billion. The engineering sector in India is poised to be one of the major beneficiaries of this agreement, with exports of engineering goods to the UK reaching $4.7 billion in 2025-26 and expectations to surpass $7.5 billion by 2029-30.
The agreement’s services component is extensive, covering 137 sub-sectors such as information technology, telecommunications, finance, business services, and education. It also simplifies entry rules for temporary business travelers, investors, and professionals. Moreover, the Double Contribution Convention associated with the agreement exempts eligible Indian professionals and employers from contributing to Britain’s National Insurance system for up to five years, which is expected to benefit approximately 75,000 workers and 900 employers.
This agreement also opens up government procurement opportunities in both countries, allowing Indian firms to access contracts in the UK while creating similar opportunities for British businesses in India. This expanded access is poised to further strengthen economic ties and foster mutual growth between the two countries.