A new trade agreement between India and the United Kingdom has taken effect, promising to lower tariffs on a wide array of products and open new avenues for business and professional collaboration. The Comprehensive Economic and Trade Agreement, effective from Wednesday, is expected to enhance trade by granting Indian exporters duty-free access to most British tariff lines, significantly benefiting industries such as textiles, leather, footwear, marine products, gems and jewellery, and processed foods. Indian officials are optimistic that the agreement will bolster exports by enhancing competitiveness in markets where British tariffs previously ranged from 4% to 20%.
On the other hand, the UK stands to gain increased access to India’s burgeoning economy through phased tariff reductions and quotas in sectors like automobiles and silver. The agreement also paves the way for expanded opportunities in procurement and services, including financial services, insurance, education, and professional services. Notably, the UK will immediately eliminate duties on 96.8% of tariff lines, covering 97.7% of trade by value, while India will remove tariffs on 64.1% of tariff lines and gradually phase out duties on an additional 21%, safeguarding sensitive sectors.
Trade relations between the two nations have been on an upward trajectory, with India exporting goods worth $13.44 billion to Britain and importing goods valued at $11.68 billion in the 2025-26 fiscal year. Bilateral services trade reached $35.44 billion in 2024, where India maintained a services surplus of nearly $7.9 billion. The engineering sector in India is poised to be one of the biggest beneficiaries, with exports of engineering goods to Britain standing at $4.7 billion in 2025-26, and industry forecasts predicting this figure could exceed $7.5 billion by 2029-30.
The agreement encompasses 137 sub-sectors within its services component, including areas such as information technology, telecommunications, finance, business services, and education. Additionally, it streamlines temporary entry rules for business travelers, investors, and professionals, enhancing mobility between the two countries. The accompanying Double Contribution Convention provides further benefits by exempting eligible Indian professionals and employers from contributing to Britain’s National Insurance system for up to five years, affecting around 75,000 workers and 900 employers.
Moreover, the deal opens up government procurement opportunities in both nations, granting Indian firms access to contracts in the UK and creating reciprocal openings for British businesses in India. This comprehensive trade agreement marks a significant step forward in strengthening economic ties between India and the United Kingdom, promising to foster increased trade and investment in the coming years.