The Comprehensive Economic and Trade Agreement between India and the United Kingdom officially took effect on Wednesday, marking a significant milestone in bilateral trade relations. This agreement aims to reduce tariffs on a vast array of products, thereby creating enhanced opportunities for businesses and professionals in both nations. For Indian exporters, the deal provides duty-free access to the majority of British tariff lines, which is expected to benefit key sectors such as textiles, leather, footwear, marine products, gems and jewellery, and processed foods. Indian officials anticipate that this development will boost exports by making Indian products more competitive in the UK market, where tariffs previously ranged between 4% and 20%.
The UK, on the other hand, stands to gain from increased access to India’s burgeoning economy through phased tariff reductions and quotas in sectors like automobiles and silver. The agreement also promises expanded opportunities in areas such as procurement, financial services, insurance, education, and professional services. Under the terms of the pact, the UK will immediately remove duties on 96.8% of its tariff lines, encompassing 97.7% of trade by value. India, meanwhile, will eliminate tariffs on 64.1% of its tariff lines right away, with plans to gradually phase out an additional 21%, while still safeguarding sensitive sectors.
Trade between India and the UK has been on a steady incline in recent years. During the 2025-26 fiscal year, India exported goods worth $13.44 billion to the UK and imported goods valued at $11.68 billion. In 2024, the bilateral services trade reached $35.44 billion, with India enjoying a services surplus of nearly $7.9 billion. The engineering sector in India is poised to be one of the biggest beneficiaries of the agreement, with exports of engineering goods to the UK hitting $4.7 billion in 2025-26. Industry experts project this figure could rise to $7.5 billion by the 2029-30 fiscal year.
The agreement’s services component is extensive, covering 137 sub-sectors including information technology, telecommunications, finance, business services, and education. It also eases temporary entry rules for business travelers, investors, and professionals, fostering greater mobility between the two countries. Furthermore, the associated Double Contribution Convention offers exemptions for eligible Indian professionals and employers from contributing to the UK’s National Insurance system for up to five years, a move that is expected to benefit approximately 75,000 workers and 900 employers.
Another significant aspect of the agreement is the opening up of government procurement opportunities in both countries. This development grants Indian firms access to contracts in the UK while simultaneously creating reciprocal opportunities for British businesses in India. Such measures are set to deepen economic ties and foster a more dynamic trade relationship between the two nations.