India and the UK to Launch Trade Agreement in May, Featuring Duty-Free Exports and Reduced Tariffs on Goods
India-UK Free Trade Agreement Set to Come into Force in May
India and the UK are on the cusp of implementing a landmark free trade agreement, with an official confirming that the Comprehensive Economic and Trade Agreement (CETA) is likely to come into force from the second week of May. The agreement, signed on July 24, 2025, will see 99 per cent of Indian exports enter the British market at zero duty, marking a significant shift in the two countries' trade dynamics.
The CETA pact is part of a broader effort to strengthen economic ties between India and the UK. The agreement also includes the Double Contributions Convention (DCC) pact, which ensures that temporary workers will not have to duplicate social levies in either country. Notably, both pacts are expected to be implemented in parallel, paving the way for a seamless transition.
The CETA agreement has ambitious goals, aiming to double the USD 56 billion trade between the two economies by 2030. To achieve this, India will open its market to various consumer goods, including chocolates, biscuits, and cosmetics. In return, India will gain greater access to export products such as textiles, footwear, gems and jewellery, sports goods, and toys.
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The agreement also offers significant benefits to the UK, with tariffs on Scotch whisky being reduced from 150 per cent to 75 per cent immediately, and further lowered to 40 per cent by 2035. On automobiles, India will reduce import duties to 10 per cent over five years, down from the current rate of up to 110 per cent, under a gradually liberalised quota system.
| Product | Current Tariff | Post-CETA Tariff |
|---|---|---|
| Scotch Whisky | 150% | 75% (immediate), 40% (2035) |
| Automobiles | Up to 110% | 10% (over 5 years) |
Under the agreement, Indian manufacturers will gain access to the UK market for electric and hybrid vehicles within a quota framework, marking a significant opportunity for growth and development. As the CETA agreement comes into force, both India and the UK are poised to reap the benefits of a strengthened economic partnership.
Investor Takeaway
Investors should expect increased trade and economic cooperation between India and the UK.
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