India-UK FTA kicks in today: Nearly 99% of Indian exports get duty-free access to UK market

India’s landmark free trade agreement with the United Kingdom came into force on Wednesday, opening a new phase in bilateral economic ties with nearly 99 per cent of Indian exports set to receive duty-free access to the UK market.

The Comprehensive Economic and Trade Agreement (CETA) between India and the UK, along with the Agreement on Social Security, also known as the Double Contribution Convention (DCC), became operational from July 15.

The pact is expected to boost exports across key sectors, including textiles, leather, footwear, gems and jewellery, processed food, marine products, engineering goods and auto components, by removing tariff barriers and improving the competitiveness of Indian businesses in Britain.

Marking the implementation of the agreement, the first export consignments under the India-UK FTA were flagged off from Gujarat’s Sanand in Ahmedabad.

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British Deputy High Commissioner Steve Hickling and Joint Director of the Directorate General of Foreign Trade (DGFT) Dr Rahul Singh flagged off the first consignments at the Inland Container Depot (ICD) in Sanand, marking the start of preferential trade under the agreement.

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The move signals the transition of the trade pact from negotiations to actual commercial implementation, with Indian exporters beginning to access the benefits of reduced tariffs in the UK market.

PM Modi calls FTA a ‘significant moment’

Prime Minister Narendra Modi called the implementation of the India-UK CETA and the social security agreement a “significant moment” in the bilateral partnership.

“With the coming into force of the Comprehensive Economic and Trade Agreement and the Agreement on Social Security, our economic linkages are going to get even deeper,” Modi said in a post on X.

He said the trade agreement would provide fresh momentum to farmers, entrepreneurs and MSMEs while strengthening market access for several Indian sectors.

“The CETA will give fresh momentum to our farmers, entrepreneurs and MSMEs. Several vibrant sectors will gain stronger access to the UK market,” Modi said.

The Prime Minister added that the pact would deepen cooperation in technology, professional services and innovation while supporting greater mobility for skilled Indian talent.

“The social security agreement will provide invaluable support to Indian professionals working temporarily in the UK and strengthen the competitiveness of Indian enterprises,” he said.

Modi said the agreement reflected the trust between the two democracies and their shared ambition to build a partnership driven by trade, technology, investment and innovation.

India eyes $100 billion trade target

Commerce Secretary Rajesh Agrawal described the India-UK CETA as a “defining milestone” in India’s trade journey, saying it establishes a future-oriented economic partnership between two major economies.

“The entry into force of the India-UK Comprehensive Economic and Trade Agreement and the Double Contribution Convention on July 15, 2026, is a defining moment in India's trade history,” Agrawal said while briefing the media in New Delhi.

He said the agreement would mark the beginning of a new phase in India-UK trade and investment relations by reducing tariff and non-tariff barriers.

The agreement covers 30 chapters, including digital trade, government procurement, small and medium enterprises, innovation, labour, environment and gender.

The pact aims to increase bilateral trade between India and the UK to $100 billion by 2030. Currently, trade between the two countries stands at around $55-60 billion.

“The target is that in the next three-four years, we will be able to reach $100 billion,” Agrawal said.

Exporters gain from tariff elimination

Under CETA, Indian exporters will receive zero-duty access across nearly 99 per cent of tariff lines in the UK market.

Tariffs of up to 70 per cent on processed food products, over 21 per cent on marine products, around 18 per cent on engineering goods and auto components, up to 16 per cent on leather and footwear products, and nearly 12 per cent on textiles and clothing will be reduced to zero.

The removal of duties is expected to strengthen India’s competitiveness in sectors where exporters have faced disadvantages compared with countries such as Bangladesh, Vietnam and Cambodia.

Textiles and apparel manufacturers are expected to be among the biggest beneficiaries as Indian exporters gain improved access to the UK’s fashion and retail market.

The gems and jewellery sector is also expected to benefit from lower duties, while processed food exporters could gain opportunities in categories such as ready-to-eat products, seafood and ethnic foods.

However, industry experts have cautioned that tariff elimination alone will not guarantee export growth. Indian businesses, particularly MSMEs, will need to improve quality standards, logistics, supply-chain efficiency and compliance with UK regulations.

Steel exporters get wider market access

The India-UK FTA is also expected to provide a boost to Indian steel exporters by improving market access and reducing trade uncertainties.

Vinayak Vipul, Partner, Business Consulting, EY-Parthenon India, said the agreement would provide Indian steel producers with enhanced country-specific quotas and wider duty-free access to the UK market.

He said the benefits would be particularly significant for steel products such as hot-rolled steel and strips, merchant and light bars, and welded tubes, where quota restrictions had earlier limited export potential.

According to Vipul, the agreement would provide greater predictability for producers, allowing them to plan capacity utilisation and long-term investments with more confidence as India expands its steel production capacity.

However, he cautioned that the industry would need to prepare for emerging carbon-related trade barriers. The UK’s carbon border mechanism, expected to come into effect from January 2027, could make emissions intensity an important factor for future market access.

He said sustainable and low-carbon steel production would increasingly determine India’s ability to compete in global markets.

India keeps sensitive sectors protected

While the agreement opens several sectors, India has retained safeguards for sensitive areas.

Dairy products, cereals, millets, edible oils, oilseeds, apples and several vegetable products have been kept outside tariff concessions.

The government has also protected small and mid-segment internal combustion engine (ICE) vehicles and affordable electric vehicles from immediate competition.

Premium vehicles from the UK will receive phased tariff concessions. Under tariff-rate quotas, customs duties on large ICE vehicles will gradually decline to 10 per cent by the fifth year of implementation.

Premium electric vehicles, hybrid cars and hydrogen-powered vehicles will begin receiving concessions from the sixth year, giving India’s domestic automobile industry additional time to strengthen its capabilities.

Social security relief for Indian professionals

Alongside CETA, the Double Contribution Convention came into force, providing relief to Indian professionals and companies operating in the UK.

Under the agreement, eligible Indian workers sent to Britain on temporary assignments will be exempt from paying social security contributions there for the specified period.

Currently, Indian employees and employers contribute to the UK’s National Insurance system, which can amount to around 23 per cent of salary costs.

Industry estimates suggest the arrangement could result in savings of nearly $600 million for Indian companies and professionals.

The move is expected to benefit Indian IT firms, service providers and other businesses that deploy employees to the UK.

Silver, Scotch whisky among UK beneficiaries

The agreement also provides benefits to British exporters.

Silver is expected to emerge as one of the biggest beneficiaries, with India importing silver bars worth around $5 billion from the UK in FY2025-26.

Import duties on silver bars will be gradually phased out over a 10-year period under CETA.

However, gold bars have not received tariff concessions under the agreement.

Premium alcoholic beverages, including Scotch whisky, have also received tariff relief. Import duties on Scotch whisky will be reduced from 150 per cent to 75 per cent initially and further lowered to 40 per cent over 10 years, subject to conditions such as minimum import prices.

New chapter in India-UK economic ties

Signed on July 24, 2025, in London in the presence of Prime Minister Narendra Modi and UK Prime Minister Keir Starmer, the India-UK CETA is among India’s most comprehensive trade agreements.

The implementation of the agreement marks a major step in India’s push to expand its global trade footprint and deepen economic engagement with developed economies.

While the FTA has opened the doors to the UK market, the next challenge for Indian companies will be converting tariff advantages into sustained export growth by improving competitiveness, meeting global standards and building stronger supply chains.