India Fast Facts

The 2026 India UK FTA and the Next Phase of Bilateral Trade

by | Oct 14, 2026 | In the news | 0 comments

New Delhi, 14 October 2026
By Anjali Batra

The India-UK Free Trade Agreement, officially known as the India-United Kingdom Comprehensive Economic and Trade Agreement (CETA), is a trade pact designed to boost bilateral economic ties, reduce trade barriers and double bilateral trade by 2030. The agreement was signed on 24 July 2025 and entered into force a year later, on 15 July 2026, following 14 rounds of negotiations that opened on 13 January 2022.

Negotiations concluded on 6 May 2025, and the deal was subsequently finalized under UK Prime Minister Keir Starmer, who sought a domestic economic boost, while India looked to secure a major Western trade corridor after its 2019 exit from the Regional Comprehensive Economic Partnership (RCEP). Against this backdrop, bilateral trade between India and the UK stood at £48 billion in 2025. UK government projections estimate that CETA could increase bilateral trade by up to £25.5 billion annually in the long run. The agreement also supports the movement of certain workers through the Double Contributions Convention (DCC), which prevents eligible seconded workers from paying social-security contributions in both countries.

Tariffs Cuts and Market Access Under CETA
India’s average tariff on UK goods fell from 12% to 3%; the UK’s on Indian goods, from 4% to zero. Over 99 percent of Indian exports enter duty-free from day one, including products that previously faced high UK tariffs: 12 percent on textiles, 16 percent on leather, 18 percent on engineering goods, and up to 70 percent on certain processed foods, alongside gems, jewellery, and toys. Meanwhile, sensitive agricultural products like sugar, rice, pork, chicken, and eggs remain excluded. While the agreement delivers broad commercial gains, economic modeling projects that increased competition will lead to a £114 million contraction in Gross Value Added for the UK’s domestic textiles, apparel, and leather sector over the long term. 

On the Indian side, market opening is more gradual. India will remove tariffs on 90% of the products it imports from the UK, covering 92% of the value of its 2022 imports. However, the cuts are phased in: 64% of physical goods export lines become duty-free immediately (worth £1.9 billion, representing roughly 28% of total UK goods exports to India), rising to 85% over ten years. Dairy, cereals and edible oils stay outside the deal. For example, tariffs on Scotch whisky fall to 75% when the agreement begins and then to 40% by year ten. 

Under the automotive tariff-rate quota framework, the number of qualifying UK-built cars permitted at concessional duties is structured to rise from 20,000 in year one to 37,000 by year five, with import tariffs eventually falling from around 110% down to 10%. However, initial implementation data reveals a much slower actual uptake: following an initial DGFT application window seeking buyers for roughly 5,000 vehicles, the government approved quotas for only 642 cars across seven eligible companies. This stark gap between formal trade allowances and modest early utilization highlights that while the FTA opens wide structural pathways for vehicle imports on paper, real-world market entry remains measured and gradual as manufacturers navigate compliance and distribution.

UK exporters would save an estimated £398 million in duties in year one, rising to £889 million by year ten. For Indian exporters, the estimate is £221 million although the actual gains may be lower because Indian exporters currently use FTA preferences on only 20-30% of eligible trade. The Global Trade Research Initiative (GTRI) notes many of these lines already carried near-zero UK duties before CETA. On day one, India ceremonially sent off 50-plus consignments worth over US$140 million as a symbolic start.

On Intellectual property & the Fine Print
Intellectual Property (IP) rules protect creations such as brand names, inventions, and designs. Chapter 13 of CETA extends UK protection to more than 600 Indian geographical indications, including Darjeeling Tea and Kolhapuri Chappals. India provides similar protection for Scotch Whisky.

On patents, India retained the flexibility provided by its existing patent law. However, the agreement expresses a preference for voluntary licensing (where a patent holder allows others to use a patent) over compulsory licensing, where a government can allow such use without the holder’s consent. Public health advocates and international policy observers have raised concerns that this language could become relevant in future disputes over generic medicines, or cheaper versions of patented drugs. However, the provision is a stated preference and does not override India’s existing patent law.

Traditional knowledge, meaning knowledge passed down within communities, receives more limited protection. The agreement protects against foreign patents being wrongly granted for knowledge that is genuinely Indian, but does not create a separate IP right for traditional knowledge. Copyright, trademarks, designs, trade secrets and enforcement are also covered. The enforcement provisions cover border measures, civil and criminal remedies, and domain-name disputes.

Movement of workers
Regarding visas, CETA also made it easier for some professionals to work in each other’s country. Intra-corporate transferees (employees moved within the same company) can stay for up to three years, with the possibility of a further two-year extension. Business visitors can stay for up to 90 days without undergoing an economic-needs test, which is a burdensome regulatory check that normally forces companies to prove that no local worker is available before hiring foreign personnel. By waiving this requirement, the agreement significantly streamlines short-term corporate mobility and professional travel. Contractual specialists (professionals hired for a specific contract) can stay for up to one year. A narrow, named-occupation route is subject to a combined annual cap of 1,800 visas shared across chefs, yoga instructors, and classical musicians. The UK Home Office and Indian visa rules still apply on top of all of these.

With respect to social security, the Double Contributions Convention (DCC) exempts seconded workers (employees temporarily transferred by their employer to work in the other country) from paying social-security contributions in both countries for up to five years. Under this arrangement, such employees keep paying into their home country’s system, such as India’s Employees’ Provident Fund or UK National Insurance, while remaining exempt from social-security contributions in the host country for up to 60 months. The DCC therefore reduces the cost of temporarily transferring employees between the two countries.

What CETA does not change
Beyond the tariff cuts, several legal and practical realities shape how CETA works in practice. 

  • Other taxes still apply. Zero-duty access removes only import tariffs. Domestic taxes such as GST and IGST (India’s Goods and Services Tax and its version on imports) and VAT (the UK’s value-added tax) apply in full. 
  • CETA has no investment chapter, meaning disputes are handled strictly between governments through the Joint Committee rather than through investor-state arbitration, which would allow a company to bring a claim directly against a government.
  • Digital provisions ban governments from forcing companies to hand over software code, while still allowing rules that require data to be stored locally inside the country.
  • The technical chapters encourage the use of international product standards and recognition of each other’s product testing. They do not create one common set of product rules.
  • Bilateral safeguard mechanisms, which let a country temporarily raise tariffs or suspend tariff concessions when a sudden increase in imports seriously harms or threatens domestic industry, remain available.
  • Mutual recognition of professional qualifications (each country accepting the other’s qualifications) for legal, accounting and architectural services remains pending, with frameworks due to be established by July 2027.

Two important UK measures also sit outside CETA but will affect Indian exporters. First, the UK’s Carbon Border Adjustment Mechanism (CBAM), which puts a price on the carbon emissions linked to certain imported goods, will apply to Indian aluminum, cement, fertilizer, hydrogen, iron, and steel exports starting 1 January 2027. However, this impact may be reduced because the UK recognizes India’s domestic carbon credit scheme, allowing exporters to claim relief by proving they already paid a carbon price at home. Second, the UK’s national steel safeguards (import limits introduced in July 2026 to protect domestic steel) sit outside the CETA framework, but a separate bilateral understanding ensures that 85 percent of Indian steel exports are exempt from these import restrictions.

Sectoral Highlights and Industrial Impact 

  1. Manufacturing and industrial trade: India’s engineering exports to the UK, spanning machinery, electrical equipment and auto components, are positioned for substantial expansion, supported by zero-duty entry and manufacturing clusters across Tamil Nadu, Karnataka, Uttar Pradesh, Maharashtra, Gujarat and Telangana. UK machinery and aerospace exporters also gain reciprocal duty reductions. 
  2. Technology and services: CETA sets a baseline for cross-border services and mobility. Advanced technology cooperation and high-value digital investment are being pursued separately through the UK-India Technology Security Initiative (TSI).. 
  3. India’s wider trade strategy: CETA is India’s fifteenth bilateral trade agreement in force. It supports a strategy of building trade routes with many partners, reducing India’s exposure to shocks in any one market. The agreement is also expected to increase the long-term GDP of both economies.
  4. Compliance: claim zero duty, exporters must prove their goods qualify under the agreement’s rules of origin, which determine whether a product is considered to come from India or the UK. CETA uses origin self-certification, meaning the exporter declares the origin itself, through the DGFT’s e-CoO 2.0 online platform in India and HMRC (His Majesty’s Revenue and Customs, the UK tax authority) frameworks in the UK. There is a 48-hour target for customs clearance for compliant consignments, with oversight from the Joint Committee. The first certificates of origin under CETA were issued through India’s eCoO 2.0 platform on a self-certification basis.

Future Milestones and Implementation Checkpoints
Looking ahead, several critical milestones will shape the long-term performance of the trade agreement. India’s trade network extends beyond the UK, and competition from other partners will shape how much value CETA ultimately delivers. Chief among these is the anticipated early-2027 finalisation of the EU-India trade accord, which could narrow the UK’s initial first-mover advantage as India expands its network of major European trade partners.

Domestically, the pact’s success will be tested by the parallel implementation of the UK’s carbon border adjustment mechanism alongside national steel safeguards. A second test will be whether exporters actually use the preferences available under CETA: the current 20% to 30% utilisation baseline suggests that tariff concessions alone will not guarantee increased trade. On the regulatory front, the July 2027 deadline for mutual recognition frameworks for professional qualifications will provide an early test of whether the agreement can move beyond tariff liberalisation into deeper services integration. Finally, the deal’s ultimate depth depends on whether future Joint Committee sessions will revisit broader labour mobility expansions, moving beyond the current framework’s restrictive focus on short-term intra-corporate transferees, contractual service suppliers, and traditional business-visitor routes.

References

  1. Department for Business and Trade (DBT), “UK-India trade deal: conclusion agreement summary,” GOV.UK, published 6 May 2025, updated 15 July 2026. https://www.gov.uk/government/publications/uk-india-trade-deal-conclusion-summary/uk-india-trade-deal-conclusion-summary
  2. Business.gov.uk (DBT), “Historic UK-India free trade agreement is in effect,” last updated 3 August 2026. https://www.business.gov.uk/campaign/alive-with-opportunity/the-uk-india-trade-deal/
  3. Press Information Bureau (PIB), Ministry of Commerce and Industry, “India and the United Kingdom Unleash a Next Generation Economic Corridor: CETA and Agreement on Social Security Contributions Set to Enter into Force on 15th July 2026,” 17 June 2026. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2274280&reg=48&lang=2
  4. UK Parliament, Business and Trade Committee, “UK-India Comprehensive Economic and Trade Agreement (CETA),” Twelfth Report of Session 2024–26, HC 996, 21 January 2026 (Tables 1–3, paras 21, 24–26, 32, 34, 99 and 101, Box 1 and Annexes 2–3). https://publications.parliament.uk/pa/cm5901/cmselect/cmbeis/996/report.html
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  25. Mondaq, “Professional Services Under India-UK FTA: Key Takeaways” (ICT, CSS and business-visitor mobility terms). https://www.mondaq.com/india/international-trade-investment/1824006/professional-services-under-india-uk-fta-key-takeaways
  26. High Commission of India, London, “Technology Security Initiative (TSI).” https://www.hcilondon.gov.in/page/technology-security-initiative-tsi/
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  30. Knowledge Ecology International (KEI) / Third World Network, commentary on India-UK CETA IP chapter and voluntary licensing. https://www.keionline.org/uk-india-fta
  31. UK Government, “India-UK Vision 2035” framework document, 24 July 2025. https://assets.publishing.service.gov.uk/media/6883607bdd3822343e58af0c/india-uk-vision-2035.pdf

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