A landmark trade agreement between India and the United Kingdom came into force on Wednesday, marking a significant development in economic relations between the two nations. The Comprehensive Economic and Trade Agreement aims to lower tariffs on a vast range of products while opening new avenues for businesses and professionals in both countries. The deal is set to provide Indian exporters with duty-free access to the majority of British tariff lines, particularly benefiting industries such as textiles, leather, footwear, marine products, gems and jewellery, and processed foods. Indian authorities anticipate that this will enhance their competitiveness in markets where British tariffs previously posed a barrier, ranging from 4% to 20%.
The United Kingdom, on the other hand, stands to gain more extensive entry into India’s burgeoning economy through phased reductions in tariffs and the introduction of quotas in sectors like automobiles and silver. Additionally, the agreement broadens opportunities in areas such as procurement, financial services, insurance, education, and professional services. Under the terms of the agreement, Britain will immediately abolish duties on 96.8% of its tariff lines, which represents 97.7% of trade by value. Meanwhile, India will eliminate tariffs on 64.1% of its tariff lines immediately and will gradually reduce duties on another 21%, while safeguarding its sensitive sectors.
Recent years have seen a steady increase in trade between the two countries. In the 2025-26 fiscal year, India’s exports to Britain were valued at $13.44 billion, while imports from Britain stood at $11.68 billion. Furthermore, bilateral services trade reached $35.44 billion in 2024, with India enjoying a services surplus of nearly $7.9 billion. The engineering sector in India is poised to be one of the primary beneficiaries of the agreement, with engineering goods exports to Britain totaling $4.7 billion in 2025-26. Industry experts project this figure could surpass $7.5 billion by the 2029-30 fiscal year.
The services aspect of the agreement encompasses 137 sub-sectors, including information technology, telecommunications, finance, business services, and education. It also simplifies the rules for temporary entry of business travelers, investors, and professionals. Notably, the accompanying Double Contribution Convention will exempt eligible Indian professionals and their employers from contributing to Britain’s National Insurance system for up to five years, benefiting approximately 75,000 workers and 900 employers.
The agreement further creates opportunities in government procurement for both nations, allowing Indian companies to bid for contracts in the UK and offering reciprocal opportunities for British firms in India. This comprehensive trade pact is expected to significantly bolster economic ties and stimulate growth in key sectors for both countries.