India and the United Kingdom have signed a long-negotiated free trade agreement that brings down tariffs on a range of goods and services. The deal, known as the Comprehensive Economic and Trade Agreement (CETA), was officially signed in London with Indian Prime Minister Narendra Modi and British Prime Minister Keir Starmer in attendance. Commerce Minister Piyush Goyal and UK Secretary of State for Business and Trade Jonathan Reynolds completed the formalities.
The trade agreement comes at a time when both countries are seeking to strengthen economic ties. With the UK having exited the European Union, trade deals with growing markets like India are crucial. For India, the deal opens up the UK market to more Indian goods and services, while also making imported British items cheaper for Indian consumers. Both governments have set a joint target of $112 billion in two-way trade by 2030, up from the current level of nearly $56 billion.
One of the most discussed features of the agreement is that 99% of Indian exports to the UK will now enjoy duty-free access. This includes almost every major trade category, such as textiles, leather goods, engineering items, gems and jewellery, rice, marine products, and more. On the other hand, British exporters will also benefit as India reduces tariffs on a range of products. These include high-end cars, whisky, chocolates, cosmetics, soft drinks, and even medical devices. The deal also includes benefits for professionals and service providers.
For Indian consumers, the most noticeable impact will be on the prices of imported British goods. From luxury automobiles and premium alcoholic beverages to everyday products like soaps and chocolates, a variety of goods will now become more affordable. Tariff reductions across the board are expected to improve access to high-quality foreign products, and in many cases, even increase competition in domestic markets.
British automobile manufacturers are among the major beneficiaries. High-end brands such as Rolls-Royce, Jaguar Land Rover, Bentley, and Aston Martin are expected to be priced more competitively in India following sharp reductions in import duties. Previously, electric vehicles and luxury cars attracted an import duty of 110%. Under the trade deal, this will now drop to 10% within specified quotas. This is expected to make these vehicles more accessible to Indian buyers, especially in metropolitan cities where the demand for premium cars is rising.
Imported alcoholic beverages, especially Scotch whisky, will also become cheaper. Until now, India had imposed a 150% import duty on whisky. This made premium Scotch brands unaffordable for most consumers. The new deal will immediately reduce the duty from 150% to 75%, with a further gradual reduction to 40% over the next ten years. This will bring down retail prices considerably and give British whisky producers a clear edge over competitors from other countries. Industry leaders such as Diageo have welcomed the move, calling it a “great moment for both Scotch and Scotland.”
In addition to whisky, other food and drink items like chocolates, biscuits, soft drinks, lamb, and salmon will now be available at better prices in the Indian market. Tariffs on chocolates and biscuits will come down, making well-known British brands more competitive in local retail stores. These items, which were once considered luxury imports, may now enter the mainstream segment, especially among urban Indian consumers.
The trade deal also brings changes in the import of healthcare and technology-related items. Duties on medical and medtech devices will be reduced from 13.75% to zero. Items like microscopes and lenses, which earlier attracted an 11% duty, will now be duty-free. This is expected to benefit hospitals, laboratories, and research institutions, which rely heavily on imported equipment. Indian industries that work in aerospace and medical technology will also see cost reductions as parts and components become cheaper to import from the UK.
Cosmetics and beauty products are another category to benefit from the trade agreement. Items such as soaps, perfumes, lotions, and nail polish will now see tariff reductions from 10% to zero. This means that premium UK-based beauty and personal care products will become more affordable for Indian consumers. British brands are expected to expand their presence in India, where the beauty and skincare market has been growing steadily.
Silver imports will also see a major shift. Currently subject to import duties, silver will be duty-free in India within ten years under the new agreement. This may impact the jewellery and investment market in the long term, especially for those who prefer silver as an alternative to gold.
In the services sector, Indian professionals stand to gain substantial access. The agreement gives Indian firms and freelancers the right to offer services in 36 sectors in the UK without facing the ‘Economic Needs Test.’ Indian professionals will be able to work in 35 UK sectors for up to 24 months, even if they do not have a base or office in the UK. This will make it easier for Indian engineers, IT specialists, designers, and other skilled professionals to work and gain experience in the UK market.
The deal also provides for social security exemptions. Indian professionals working in the UK will be exempt from paying British social security contributions for three years, which is a cost-saving measure for both employees and their employers. This provision is likely to boost Indian participation in the British job market and improve mobility for skilled labour.
For the Indian export sector, the trade deal opens up large-scale opportunities. Labour-intensive industries such as textiles, apparel, and leather goods are expected to benefit most. These sectors provide employment to a large number of workers in India, and greater market access in the UK will likely boost production and job creation. Commerce Minister Piyush Goyal said that the deal would unlock around $23 billion in trade opportunities for these industries, encouraging inclusive and fair economic growth.
There are also gains for small businesses in both countries. By removing trade barriers and reducing import-export duties, the agreement aims to make it easier for small and medium enterprises (SMEs) to enter each other’s markets. These businesses often face high costs when trying to expand globally. With tariff cuts and simplified rules, more Indian SMEs will be able to export to the UK and vice versa.
While the deal has been hailed by business groups and policymakers, experts have cautioned that not all price reductions will be drastic. For instance, in the case of whisky, although the tariff has been halved, the actual price cut at retail level may not exceed Rs 300 per bottle initially. This is because other factors such as transport, distribution, and retailer margins still apply. Similarly, with cars, the final retail price will depend on the manufacturer’s pricing strategy, model range, and supply chain setup.
Still, the agreement marks a new stage in India-UK economic relations. It reflects a shift towards deeper trade engagement and economic cooperation between two major markets. After nearly three years of negotiations, both countries have agreed on a broad-based partnership that covers goods, services, investment, and workforce movement.
