On Wednesday, India and the United Kingdom launched their Comprehensive Economic and Trade Agreement, a strategic move aimed at reducing tariffs on a wide array of products while enhancing business and professional opportunities across both nations. This landmark agreement significantly benefits Indian exporters, granting them duty-free access to the majority of British tariff lines. Key sectors poised to gain include textiles, leather, footwear, marine products, gems and jewellery, and processed foods. Indian officials anticipate that the deal will enhance export competitiveness in markets where British tariffs previously ranged from 4% to 20%.
For the UK, this agreement opens doors to India’s burgeoning economy through gradual tariff reductions and quotas in industries such as automobiles and silver. Furthermore, it broadens the scope for involvement in procurement, financial services, insurance, education, and professional services. As part of the agreement, the UK will abolish duties on 96.8% of its tariff lines instantly, encompassing 97.7% of trade by value. In return, India will instantly eliminate tariffs on 64.1% of its tariff lines and will progressively phase out duties on an additional 21%, all while safeguarding sensitive sectors.
Trade relations between India and the UK have seen consistent growth over recent years. During the 2025-26 fiscal year, India exported goods valued at $13.44 billion to the UK, while importing goods worth $11.68 billion. The bilateral services trade reached $35.44 billion in 2024, with India maintaining a surplus of approximately $7.9 billion in services. The engineering sector in India is anticipated to be a significant beneficiary, with exports of engineering goods to the UK hitting $4.7 billion in 2025-26. Industry forecasts suggest this figure could surpass $7.5 billion by the 2029-30 fiscal year.
The services aspect of the agreement covers 137 sub-sectors, such as information technology, telecommunications, finance, business services, and education. Additionally, the agreement simplifies rules for temporary entry, facilitating smoother movement for business travelers, investors, and professionals. A notable element of the agreement is the Double Contribution Convention, which exempts eligible Indian professionals and employers from contributing to the UK’s National Insurance system for up to five years, benefiting about 75,000 workers and 900 employers.
Moreover, the agreement enhances government procurement opportunities, enabling Indian companies to access contracts in the UK while offering reciprocal opportunities for British businesses in India. This mutual opening of procurement markets is expected to strengthen economic ties and foster a more dynamic trade environment between the two countries.