A landmark trade agreement between India and the United Kingdom came into force on Wednesday, paving the way for lower tariffs, expanded market access, and stronger economic cooperation between the two countries.
The Comprehensive Economic and Trade Agreement is expected to accelerate bilateral trade by reducing trade barriers and creating new opportunities for exporters, investors, businesses, and professionals across both markets.
Under the agreement, Indian exporters will gain immediate duty-free access to most UK tariff lines, benefiting key labour intensive sectors, including textiles, leather goods, footwear, marine products, gems and jewellery, and processed foods.
The UK, in turn, will secure broader access to one of the world’s fastest-growing major economies through phased tariff reductions and expanded opportunities in sectors such as automobiles, financial services, insurance, education, professional services, and government procurement.
India’s Commerce and Industry Minister, Piyush Goyal, described the agreement as a landmark achievement that would unlock new opportunities for trade, investment, and innovation while strengthening the longstanding economic partnership between India and the UK.
According to India’s Ministry of Commerce, the country exported goods worth $13.44 billion to the UK and imported $11.68 billion during the 2025–26 financial year. Bilateral services trade reached $35.44 billion in 2024, with India recording a services trade surplus of nearly $7.9 billion.
The agreement eliminates UK import duties immediately on 96.8% of tariff lines, covering 97.7% of the value of bilateral trade. India will remove tariffs immediately on 64.1% of tariff lines and gradually phase out duties on an additional 21%, while protecting products considered strategically sensitive.
Indian officials expect the removal of UK tariffs, previously set between 4% and 20%, to boost the competitiveness of Indian exports, particularly in labour-intensive sectors.
British businesses will also benefit from India’s phased opening of its automotive and alcoholic beverage markets. Passenger vehicle imports will be managed through an annual quota of 37,000 completely built units eligible for preferential tariff treatment.
Beyond trade in goods, the pact expands market access across 137 services sub-sectors, including information technology, telecommunications, finance, education, and business services. It also eases temporary entry requirements for business visitors, investors, intra-company transferees, contractual service suppliers, and independent professionals.
A linked Double Contribution Convention will exempt eligible Indian professionals and their employers from paying into the UK’s National Insurance system for assignments of up to five years, a measure expected to benefit approximately 75,000 workers and 900 employers.
The agreement also opens the UK’s government procurement market, valued at approximately £90 billion, to eligible Indian suppliers while granting British companies access to procurement opportunities in India estimated at around $114 billion, further strengthening commercial ties between the two countries.
Goodness Anunobi
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