India and the United Kingdom have formalized a Comprehensive Economic and Trade Agreement (CETA), granting nearly 99% of Indian export tariff lines entry into the UK market free from customs duties. Aimed at doubling bilateral trade by 2030, this breakthrough deal is expected to generate new employment opportunities across key sectors in India, supporting millions of workers and catalyzing economic growth.
The deal encompasses key industries such as textiles, garments, leather, footwear, gems and jewellery, marine products, engineering goods, chemicals, and processed food.
With India having exported approximately $25 billion worth of goods to the UK last year, this agreement is expected to significantly enhance its share in the UK’s vast consumer market. It also positions India more competitively against regional export rivals like Bangladesh and Vietnam.
Finalized after two years of negotiations and 14 rounds of talks, the pact was officially signed in the presence of Prime Ministers Narendra Modi and Keir Starmer, with Commerce Minister Piyush Goyal and UK Business & Trade Secretary Jonathan Reynolds representing their respective nations.
The textile and apparel sector is set to benefit immediately. Indian garments that currently attract duties of up to 12% in the UK will now enter duty-free, giving Indian manufacturers a level playing field. This is expected to boost exports from key clusters such as Tirupur, Ludhiana and Surat. Leather and footwear exports, which face duties as high as 16%, will also see a big jump. Currently, India exports about $440 million of leather goods and footwear to the UK. Officials expect this to double within a few years, with states like Tamil Nadu, Uttar Pradesh and West Bengal standing to gain the most.
Marine exports, including shrimp and fish, are another area of focus. India’s seafood exports to the UK have been relatively small — about $180 million — compared to India’s total seafood exports of over $8 billion. Removal of duties is expected to help coastal states like Gujarat, Kerala, Andhra Pradesh and Odisha expand their exports and benefit fishing communities directly. In addition, the deal covers engineering goods, which form India’s largest export segment globally. India exports about $4.3 billion worth of engineering goods to the UK, while the UK’s total imports in this segment exceed $190 billion. With tariffs dropping to zero, India hopes to double its engineering exports to the UK within five years.
The chemicals and plastics sectors will also see tariffs scrapped, benefiting exporters of dyes, organic chemicals and plastic products. Processed food, fruits, vegetables, spices, tea and coffee will all enter the UK at zero duty, opening a bigger share of the UK’s retail and ethnic food markets. While India has opened its market for about 90% of UK tariff lines, officials stress that sensitive sectors like dairy, wheat, rice, apples, pulses, edible oils and gold are protected. Tariff cuts for items such as automobiles and premium alcoholic beverages will be phased in gradually over five to 10 years to protect domestic industries. Safeguard clauses have been built in to allow India to impose protective duties if cheap imports flood the market unexpectedly.
The agreement also brings significant gains for India’s services sector and professionals. India already exports around $20 billion in services to the UK, with information technology, finance, education, health and professional services forming the bulk.
The new deal creates a clear framework for easier temporary movement of Indian professionals to the UK. Business visitors, intra-company transferees, contractual service suppliers, independent professionals and selected cultural professionals — such as chefs, yoga teachers and classical musicians — will get smoother visa processing and specific annual quotas.
A key highlight is the double contribution exemption: Indian companies and professionals on short assignments in the UK will not have to pay National Insurance contributions twice for up to three years. This alone is expected to save Indian companies and workers over Rs 4,000 crore each year.
The government expects the new trade deal to lift India’s total exports to the UK to over $40 billion by 2030. Overall, the target for bilateral trade is set at $100 billion by the end of this decade, up from the current $56 billion in goods and services combined. States with large MSME clusters, artisan hubs, industrial zones and export-oriented units — such as Gujarat, Maharashtra, Tamil Nadu, Karnataka, West Bengal and Uttar Pradesh — are expected to see the largest gains in orders and employment. Both countries will now start their respective ratification processes to bring the agreement into force by early next year.
