India’s long-awaited free trade agreement (FTA) with the United Kingdom comes into effect today, marking one of the country’s biggest trade reforms in recent years.
Officially called the India-UK Comprehensive Economic and Trade Agreement (CETA), the deal was signed in July 2025 after 14 rounds of negotiations.
While consumers are likely to notice cheaper British products such as Scotch whisky, chocolates and premium cars over time, the agreement’s biggest gains are expected to come from greater market access for Indian exporters, professionals and businesses.
The agreement gives Indian exporters zero-duty access on nearly 99% of tariff lines in the UK while India will reduce or eliminate duties on 90% of tariff lines for British goods over a phased period. Spread across 30 chapters, the pact also covers digital trade, financial services, intellectual property, innovation, government procurement and the movement of professionals.
Here are the top 10 changes that come with the India-UK FTA.
SCOTCH WHISKY AND GIN WILL GRADUALLY BECOME CHEAPER
One of the biggest consumer-facing changes is lower duties on British alcoholic beverages.
Import duty on Scotch whisky will fall from 150% to 75% immediately and will reduce further to 40% over the next 10 years. Gin will receive similar tariff benefits.
This does not necessarily mean prices will fall overnight, as retailers and importers will decide how much of the duty reduction is passed on to consumers. But over time, premium British spirits are expected to become more affordable in India.
BRITISH CARS WILL COST LESS, BUT NOT IMMEDIATELY
The FTA also opens the door for cheaper British automobiles.
Import duties on fully built UK vehicles, currently as high as 110%, will gradually decline to 10% over a 10-year period under a quota-based system.
Electric and hybrid vehicles will also receive preferential access, but only through quotas designed to protect India’s domestic automobile industry during its transition to electric mobility.
CHOCOLATES, BISCUITS, COSMETICS AND SOFT DRINKS WILL SEE LOWER DUTIES
The agreement reduces tariffs on several everyday British consumer products.
These include chocolates, sweet biscuits, cosmetics, soft drinks and other packaged food items.
Like whisky, these products are expected to become gradually cheaper as tariff cuts are implemented over the coming years.
INDIAN EXPORTERS GET NEARLY COMPLETE DUTY-FREE ACCESS TO THE UK
The biggest gain from the agreement is expected to be for Indian exporters.
The UK will eliminate import duties on around 99% of tariff lines, covering almost the entire value of India’s exports.
This gives Indian companies easier access to one of their biggest overseas markets and helps them compete on better terms with exporters from countries that already enjoy preferential trade access.
TEXTILES, GEMS, LEATHER AND ENGINEERING GOODS ARE BIG WINNERS
Several export-oriented sectors are expected to benefit immediately.
Among them are:
- Textiles and garments
- Marine products
- Leather goods
- Footwear
- Sports goods
- Toys
- Gems and jewellery
- Engineering goods
- Auto parts and engines
- Organic chemicals
Many of these industries are labour-intensive and employ millions of people across India, making the agreement particularly important for manufacturing and exports.
INDIAN PROFESSIONALS WORKING IN THE UK WILL SAVE ON SOCIAL SECURITY
The Double Contributions Convention also comes into force today.
Under this arrangement, eligible Indian professionals working temporarily in the UK will no longer have to contribute simultaneously to social security systems in both countries.
Instead, those contributions can continue to be credited to their provident fund accounts in India.
Commerce Minister Piyush Goyal has earlier said eligible workers could save nearly 25% of their salaries that would otherwise have gone towards UK social security contributions, while continuing to earn interest in their PF accounts.
SOME PRODUCTS REMAIN PROTECTED
The agreement does not open every sector.
India has excluded several sensitive agricultural products from tariff concessions to protect domestic farmers.
These include:
- Dairy products
- Apples
- Cheese
- Sugar
- Milled rice
- Pork
- Chicken
- Eggs
These products will continue to attract existing duties and remain outside the scope of tariff reductions.
THE DEAL GOES FAR BEYOND GOODS
Unlike older FTAs that focused mainly on tariffs, the India-UK agreement covers a much wider range of sectors.
Its 30 chapters include provisions on:
- Digital trade
- Telecommunications
- Financial services
- Intellectual property
- Innovation
- Small and medium enterprises (SMEs)
- Sustainability
- Transparency
- Government procurement
- Rules of origin
- Temporary movement of professionals
- Trade and gender equality
It also includes a dedicated innovation chapter aimed at strengthening research, technology commercialisation and resilient supply chains.
TRADE BETWEEN INDIA AND THE UK IS EXPECTED TO GROW SHARPLY
The agreement comes as bilateral trade between the two countries continues to expand.
According to Commerce Ministry data, merchandise trade between India and the UK rose to $25.13 billion in FY26 from $23.13 billion in FY25.
India exported goods worth $13.44 billion to the UK during FY26, while imports from the UK jumped over 36% to $11.68 billion. As a result, India’s trade surplus with the UK narrowed to $1.76 billion from $5.97 billion a year earlier.
The UK estimates the agreement could increase bilateral trade by nearly £25.5 billion annually in the long run.
Its exports to India are projected to rise by almost 60%, while imports from India could increase by about 25% by 2040.
MSMEs COULD BE AMONG THE BIGGEST BENEFICIARIES
Experts believe the agreement could especially benefit India’s small and medium enterprises.
Kaushal Sampat, President at Vayana, said the FTA marks an important milestone for India’s trade ambitions.
“The India–UK Comprehensive Economic and Trade Agreement marks a pivotal milestone in India’s global trade journey. While the UK is already India’s fifth-largest merchandise export destination, it accounts for only around 1% of India’s merchandise imports, indicating significant headroom for a more balanced and diversified trade relationship,” he said.
“By lowering tariff barriers, improving market access, and simplifying cross-border trade, the agreement is expected to unlock new opportunities for Indian exporters, particularly MSMEs. As trade volumes increase, ensuring timely access to working capital will be equally important to help businesses scale confidently and compete effectively in the UK market,” Sampat added.
The India-UK FTA is the sixth major trade agreement signed by the Modi government after similar pacts with Mauritius, the UAE, Australia, the European Free Trade Association (EFTA) and Oman.
While consumers will gradually benefit from cheaper imported British products, the agreement’s biggest impact is likely to be on India’s exporters, manufacturers and professionals. With duty-free access to almost the entire UK market, reduced trade barriers and easier movement of skilled professionals, the deal is expected to deepen economic ties between the two countries and create new opportunities for businesses on both sides.
