India-UK Comprehensive Economic and Trade Agreement Signed
India and the United Kingdom signed a landmark trade agreement in 2025, deepening their bilateral economic ties amid global geopolitical tensions. The Comprehensive Economic and Trade Agreement (CETA) promises tariff reductions and expanded market access. This deal, finalised after over three years of negotiations, aims to double trade between the two nations by 2030.
Overview of the Agreement
CETA removes tariffs on 99 per cent of Indian exports to the UK and allows 90 per cent of UK goods tariff-free entry into India. Key Indian sectors benefiting include textiles, footwear, gems, jewellery, seafood, and engineering products. UK exports such as medical devices and aerospace components gain easier access to the Indian market. The agreement awaits UK parliamentary approval after Indian cabinet clearance.
Tariff Reductions and Market Access
India will reduce tariffs on British whisky from 150 per cent to 40 per cent over ten years. Automobile tariffs, currently as high as 110 per cent, will fall to 10 per cent but under a quota system. Consumer goods like soaps, perfumes, and nail polish will see phased tariff elimination. However, electric, hybrid, and hydrogen vehicles are excluded from concessions for five years. Sensitive products such as apples, cheese, gold bars, and smartphones remain protected. The UK excludes meat, rice, sugar, and eggs from tariff cuts.
Government Procurement and Industrial Policy
UK firms gain access to India’s government procurement market, able to bid for 40,000 tenders annually worth at least £38 billion. UK-origin goods with only 20 per cent local content qualify as Class II suppliers, a category previously reserved for Indian firms with 20–50 per cent local content. This change may dilute India’s domestic manufacturing initiatives like ‘Make in India’ and Atmanirbhar Bharat by allowing foreign input use.
Social Security and Professional Mobility
A Double Contributions Convention was signed alongside CETA to prevent double social security payments for three years. This benefits an estimated 75,000 Indian professionals working in the UK by reducing their social security contribution burden.
Unresolved Issues and Future Challenges
The agreement does not resolve concerns over the UK’s Carbon Border Adjustment Mechanism, set to start in 2027. India’s objections remain unaddressed. The deal’s phased tariff reductions and product exclusions reflect careful balancing of domestic sensitivities with trade liberalisation goals.
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