The India-UK Comprehensive Economic and Trade Agreement (CETA) came into effect on Wednesday, marking a major step in economic relations between the two countries.
The trade pact is expected to provide nearly 99% duty-free access for Indian exports to the UK, benefiting sectors such as textiles, leather, engineering goods, pharmaceuticals, agriculture and processed food.
While Indian consumers may gradually see lower prices for products such as Scotch whisky, luxury cars, cosmetics and select British goods, experts say the bigger impact will come through increased exports, investment and job creation.
The agreement also covers 137 service sectors and includes provisions to reduce social security costs for Indian professionals temporarily working in the UK. Prime Minister Narendra Modi called the deal a “historic milestone”, saying it would create opportunities for farmers, workers, MSMEs, startups and innovators.
Industry bodies, including ASSOCHAM, have projected that bilateral trade between India and the UK could nearly double to around $120 billion by 2030.
Exporters Get Major Boost
The biggest immediate advantage of the India-UK trade agreement is expected to come from improved market access for Indian exporters. Under the pact, nearly 99% of Indian exports to the UK will receive zero-duty access, covering almost the entire range of goods currently shipped to Britain.
For years, Indian businesses faced tariff barriers that made their products less competitive compared with goods from countries having preferential trade agreements with the UK. With these duties reduced or eliminated, Indian manufacturers will have greater opportunities to expand their presence in one of the world’s largest consumer markets.
Labour-intensive sectors employing millions of Indians are expected to benefit the most. These include textiles and garments, leather and footwear, gems and jewellery, marine products, engineering goods, auto components, chemicals, pharmaceuticals, processed food and agricultural products.
Industry experts believe the agreement could improve profit margins for exporters, encourage investment in manufacturing capacity and create new employment opportunities, particularly for small and medium enterprises.
Kaushal Sampat, President at Vayana, told NDTV that the agreement represents an important milestone for India’s trade ambitions and could unlock new opportunities for exporters, especially MSMEs. He highlighted that while the UK is already among India’s major merchandise export destinations, there remains significant potential to build a more balanced trade relationship.
The agreement comes at a time when countries are looking to diversify supply chains amid global economic uncertainty and geopolitical challenges. Greater access to the UK market could allow Indian businesses to reduce dependence on traditional export destinations and compete more effectively worldwide.
Consumers May See Cheaper British Products
While exporters are expected to benefit from the agreement, Indian consumers are likely to experience changes more gradually. Several British products are expected to become more affordable as tariff reductions are implemented in phases.
Among the products likely to benefit are Scotch whisky, gin, premium British cars, luxury motorcycles, cosmetics, chocolates, biscuits, medical devices and selected food products.
However, experts have cautioned that consumers should not expect immediate price cuts. The final retail price will depend on multiple factors, including company pricing strategies, distribution costs, state-level taxes and currency fluctuations.
Scotch whisky has emerged as one of the most discussed products under the agreement. Imported spirits currently carry high duties in India, making premium international brands significantly more expensive. Under the trade deal, tariffs on eligible British spirits will gradually decline over a phased period.
Luxury automobiles are another key area expected to see changes. Before the agreement, imported British-made vehicles faced duties of up to 110%, contributing significantly to their high prices in India. The new agreement will allow tariff reductions on eligible vehicles imported under specific quotas.
However, the government has introduced safeguards such as annual import limits and eligibility conditions to protect domestic automobile manufacturers and India’s growing electric vehicle sector.
Services Sector And Investment To Gain
Beyond goods and consumer products, the agreement also focuses heavily on India’s services sector. The pact covers 137 service sub-sectors, creating opportunities for Indian professionals and companies in areas such as information technology, consulting, engineering, healthcare, education and financial services.
Indian technology companies and professionals operating in the UK are expected to benefit from improved regulatory clarity and easier market access.
A significant provision in the agreement is the Double Contribution Convention (DCC), which addresses social security payments for Indian workers temporarily employed in the UK. Under this arrangement, professionals working in Britain for assignments of up to five years will not be required to make social security contributions in both countries.
This measure is expected to reduce costs for Indian companies sending employees overseas and improve their competitiveness in the UK market.
The agreement is also expected to encourage greater British investment in India across sectors such as manufacturing, renewable energy, technology, financial services and education.
Anuj Chande OBE, Partner and Head of South Asia Business Group at Grant Thornton, said the India-UK relationship is moving beyond traditional trade and becoming a broader strategic partnership focused on innovation, resilience, clean energy and advanced manufacturing.
Industry body ASSOCHAM has estimated that bilateral trade between India and the UK could nearly double to around $120 billion by 2030, driven by increased exports, services growth and investment flows.
The Logical Indian’s Perspective
The India-UK Free Trade Agreement represents an important opportunity for deeper economic cooperation between two major democracies. While discussions around cheaper luxury products may attract immediate public attention, the long-term success of the agreement will depend on whether its benefits reach ordinary citizens through more jobs, stronger small businesses, better opportunities for workers and sustainable economic growth.
Trade agreements are not only about reducing tariffs; they are about building partnerships that encourage innovation, fairness and shared prosperity. As India expands its role in global markets, it is important that businesses, workers and consumers all benefit from these changes.
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