On Wednesday, India and the United Kingdom launched their Comprehensive Economic and Trade Agreement, a significant development aimed at reducing tariffs on a wide range of products and opening up new business and professional avenues in both nations. This pact provides Indian exporters with duty-free access to a majority of British tariff lines, which is expected to greatly benefit industries like textiles, leather, footwear, marine products, gems and jewelry, and processed foods. Indian authorities are optimistic about the potential increase in exports, as the agreement removes British tariffs that previously ranged from 4% to 20%, thereby enhancing competitiveness in these markets.
The United Kingdom, on the other hand, stands to gain substantial access to India’s rapidly expanding market through a gradual reduction in tariffs and the introduction of quotas in various sectors, including automobiles and silver. The agreement also broadens prospects in procurement, financial services, insurance, education, and professional services. As per the terms of the agreement, the UK will immediately remove duties on 96.8% of its tariff lines, affecting 97.7% of trade by value. Meanwhile, India will immediately abolish tariffs on 64.1% of its tariff lines and will gradually do the same for an additional 21%, while maintaining protections for sensitive sectors.
Over the years, trade relations between India and the UK have been on an upward trajectory. During the 2025-26 fiscal year, India exported goods worth $13.44 billion to the UK, while imports amounted to $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 predicted to be a major beneficiary of this agreement, with exports of engineering goods to the UK reaching $4.7 billion in 2025-26, and expectations are high that this figure will surpass $7.5 billion by the 2029-30 fiscal year.
The services aspect of the agreement spans 137 sub-sectors, including information technology, telecommunications, finance, business services, and education, and simplifies temporary entry regulations for business travelers, investors, and professionals. Additionally, the Double Contribution Convention associated with the agreement exempts eligible Indian professionals and their employers from contributing to the UK’s National Insurance system for up to five years, an advantage expected to benefit approximately 75,000 workers and 900 employers.
Furthermore, the agreement opens up government procurement opportunities in both countries, allowing Indian companies to bid for contracts in the UK while providing reciprocal opportunities for British businesses in India. This aspect of the agreement is likely to foster increased business collaboration and cross-border investment between the two nations.