India and the UK will sign a free trade agreement, the Comprehensive Economic and Trade Agreement (CETA), on Thursday. Indian Commerce and Industry Minister Piyush Goyal and the UK’s Secretary of State for Business and Trade Jonathan Reynolds will sign the deal, with Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer attending the ceremony.
The deal enables 99% of Indian exports to enter the UK without any duties, effectively covering nearly the entire trade value. In return, India will lower or eliminate tariffs on 90% of British product categories, which represent 92% of its imports, as reported by the Financial Express.
The FTA represents the conclusion of a three-year negotiation that began in 2022, during which India and the United Kingdom addressed key disputes to forge a mutually beneficial accord. Upon implementation, the agreement will elevate the bilateral trade between the nations from $55 billion to $120 billion by 2030.
The agreement will provide benefits across key sectors, including manufacturing, agriculture, and services. Under the deal, India will gradually reduce car import duties from over 100% to 10% for a select number of vehicles. In exchange, electric and hybrid vehicles produced in India will receive preferential entry into the UK market under comparable conditions.
India will slash import duties on beverages such as whiskey and gin from 150% to 75%, with a further reduction to 40% over the next decade. In FY25, India imported $357 million worth of beverages from the UK.
Following these tariff cuts, traditional and labor-intensive Indian exports, including textiles, footwear, carpets, and marine products, will enjoy zero-duty access to the UK market. These goods currently face import duties ranging from 4% to 16%.
India will grant tariff-free entry to select UK agricultural products, including fresh and frozen salmon, cod, and lamb. Additionally, import duties on British perfumes, cosmetics, and toiletries will be gradually reduced over time.
In 2024, India’s trade in services with the United Kingdom surpassed its goods trade. Services exports from India to the UK totaled $19.90 billion, while imports of services amounted to $13.67 billion. In comparison, India exported $14.5 billion worth of goods and imported $8.9 billion in goods during the 2024–25 fiscal year.
In addition to the FTA, the UK and India have also finalized a Double Contributions Convention (DCC) to ensure that employees relocating between the two countries and their employers are required to pay social security contributions in only one country at a time.
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