British products such as Scotch whisky, gin, chocolate, biscuits and cosmetics will become cheaper in India after tariff cuts under the free trade agreement between India and the United Kingdom begin from July 15, 2026, although the cuts for some products will be implemented gradually over the coming years. Indian exporters will get almost complete tariff-free access to the UK market. This includes the benefit of zero-duty on almost 99 per cent of tariff lines, covering almost the entire value of India’s exports. The India-UK Comprehensive Economic and Trade Agreement (CETA) will come into force from July 15, 2026, almost a year after its signing.
This agreement, signed on July 24, 2025, will come into force after 14 rounds of negotiations. This is expected to reduce duties on a range of goods, improve market access and provide greater certainty for businesses trading between India and the UK. Spanning 30 chapters, the agreement goes far beyond traditional tariff reductions; This includes areas such as digital trade, telecommunication, financial services, intellectual property, innovation, SMEs, sustainability, transparency and government procurement.
Indian professionals working in the UK will also benefit from social security relief as the ‘Double Contribution Convention’ will come into effect from July 15. This will exempt eligible temporary workers from paying social security contributions in both countries for a certain period.
India-UK trade crosses $25 billion
This agreement comes at a time when bilateral trade between India and the UK is growing; However, India’s trade surplus with London narrowed significantly in 2025-26 as imports grew faster than exports. According to Commerce Ministry data, India-UK trade in goods is set to grow from $17.48 billion in 2021-22 and $23.13 billion in 2024-25 to $25.13 billion in 2025-26.
India’s exports to the UK in 2025-26 stood at $13.44 billion, up from $14.55 billion in 2024-25. The UK’s share in India’s total merchandise exports that year was 3.04 percent.
Imports from UK to rise to $11.68 billion in 2025-26 from $8.58 billion last year; That means it increased by 36.11 percent.
As a result, India’s trade surplus with the UK declined from $5.97 billion in 2024-25 to $1.76 billion in 2025-26.
Advantages for textile, gems and engineering goods
Indian exports will enjoy duty-free access to almost 99 per cent of tariff lines covering almost 100 per cent of trade value.
It is believed that labour-intensive sectors like textiles, marine products, leather, footwear, sporting goods, toys and gems and jewelery will benefit the most.
Other major export products – including engineering goods, auto parts and engines and organic chemicals – are also expected to benefit from improved market access.
The removal of tariff barriers is expected to help Indian exporters compete better in the UK market, where suppliers from some other countries have previously enjoyed preferential access.
UK exporters will get access to the Indian market
India, on the other hand, will reduce or eliminate tariffs on 90 percent of tariff lines. 85 percent of these lines will become completely duty-free within a decade. The UK government estimates that tariffs on British exports to India will be reduced by approximately £400 million immediately. After 10 years, when the tariff cuts are fully implemented, this figure is expected to rise to around £900 million annually. There is also an estimated reduction in duty on imports from India to the UK by about £220 million.
Key benefits for the UK: whiskey and automobiles
British whiskey and gin exporters will benefit the most. The tariff on whiskey will initially be reduced from 150 percent to 75 percent and then to 40 percent over 10 years.
Automobile exporters will also benefit from the quota-based system. Tariffs on fully finished vehicles from the UK – currently up to 110 per cent – will gradually reduce to 10 per cent over 10 years under the quota framework.
British electric and hybrid vehicles will also enter the Indian market in phases and under quota, to protect India’s domestic automobile industry during the transition to electric mobility.
British food and drink exporters will also benefit. Under the agreement, tariffs on products such as chocolate, sweet biscuits and soft drinks will be reduced in India.
FTA estimated to increase trade by £25.5 billion
As per the UK Government’s assessment of the India-UK FTA, the agreement will reduce tariff barriers, improve market access and promote bilateral trade in goods and services.
Assessments show that UK exports to India could increase by about 60 percent in the long run. Exports would increase by an additional £15.7 billion by 2040 compared to the no-FTA situation.
UK imports from India are projected to increase by 25 per cent, adding around £9.8 billion, while total bilateral trade could grow by around 39 per cent – or around £25.5 billion – annually. The UK estimates that this agreement could increase its GDP by 0.13 percent by 2040. This equates to an increase of approximately £4.8 billion per year compared to the ‘no deal’ scenario.
**Protection for sensitive agricultural areas under the agreement**
Under the FTA, India has excluded sensitive agricultural products – such as dairy products, apples and cheese – from tariff exemptions to protect domestic farmers from increased competition from imports. Other sensitive products such as sugar, milled rice, pork, chicken and eggs are also protected through exemptions or special provisions in the agreement. India’s dairy sector has been given protection in recent trade agreements as it is vital to small farmers and rural livelihoods.
**Commitments on services and movement of people**
The agreement includes commitments on digitally delivered services, temporary movement of professionals and intellectual property. India has secured provisions on digital trade that it expects will benefit Indian exporters of IT and IT-enabled services. The UK is one of India’s largest markets for exports of technology services.
A simplified social security system through the ‘Double Contribution Convention’ will also be a major benefit; Contributions that previously went to the British social security system will now be deposited into the Provident Fund (PF) accounts of individuals in India.
Commerce Minister Piyush Goyal recently said that employees can save about 25 per cent of their salaries – this is the money that previously paid as UK social security contributions. Apart from this, interest will also be available on this amount in their PF accounts. At the same time, under certain conditions, the UK has gained better access for its companies in India’s government procurement market. Under the ‘Make in India’ procurement framework, British companies will be granted ‘Class 2’ supplier status if at least 20 per cent of their product or service is manufactured in the UK.
**Key Points for Exporters**
While the FTA will provide broader market access, exporters want greater clarity on steel shipments – particularly on the quota system and how it fits in with UK specific steel measures.
India has indicated that about 85 per cent of steel tariff lines will get preferential access under the agreement, with quotas earmarked for specific categories. However, exporters want clarity on the quantum of quota, product coverage and allocation process.
The steel-specific measures will operate separately and independently of the FTA. Exporters should also keep a close eye on the UK’s ‘Carbon Border Adjustment Mechanism’ (CBAM), as it is not covered by this agreement.
The UK’s CBAM, which will come into effect from January 1, 2027, will cover sectors such as iron and steel, aluminium, cement, fertilizer and hydrogen. Under this system, exporters will have to meet additional requirements related to carbon reporting and costs.
