India-UK Trade Pact takes effect as PM Modi says deal will deepen economic ties and boost exports

New Delhi, Jul 16: The India-United Kingdom Comprehensive Economic and Trade Agreement (CETA) came into force on Wednesday, opening duty-free access for nearly 99 per cent of Indian exports to the UK while reducing trade barriers across goods, services and investment, as Prime Minister Narendra Modi said the agreement would deepen economic engagement and expand opportunities for businesses and professionals in both countries.

Under the agreement, 99 per cent of Indian goods entering the UK and around 90 per cent of UK goods entering India will either be exempt from customs duties or benefit from lower tariffs. The arrangement covers sectors including textiles, leather, gems and jewellery, engineering goods, marine products, pharmaceuticals, processed food, automotive, manufacturing, consumer goods, creative industries and medical technology.

The agreement also widens market access in services, digital trade and government procurement, while the accompanying Agreement on Social Security, also known as the Double Contribution Convention, exempts Indian professionals posted temporarily in the UK for up to 60 months from making social security contributions in both countries, lowering employment costs for workers and employers.

Prime Minister Narendra Modi described the implementation of the agreements as an important step in India-UK relations, saying they would strengthen economic linkages, provide fresh opportunities for farmers, entrepreneurs and micro, small and medium enterprises (MSMEs), improve access to the UK market and promote cooperation in technology, professional services and innovation. He said the social security arrangement would enhance the competitiveness of Indian enterprises while supporting skilled professionals working in Britain.

Commerce Secretary Rajesh Agrawal said the agreement was concluded after more than 800 technical sessions and 14 rounds of negotiations between the two countries. He disclosed that goods worth USD 140 million were shipped on the first day of the agreement’s implementation and said the Commerce Ministry, along with industry bodies and export promotion councils, would undertake awareness programmes to help businesses utilise the provisions of the pact.

India has extended tariff concessions on 89.5 per cent of its tariff lines, covering 91 per cent of UK exports, while retaining safeguards for sensitive sectors such as dairy, cereals, edible oils and selected manufacturing industries through phased tariff reductions and quota-based access. Duties on British automobiles and alcoholic beverages will also be reduced gradually under a transition framework designed to protect domestic producers.

According to government data, merchandise trade between India and the UK reached USD 25.1 billion during 2025-26, while bilateral services trade stood at USD 35.4 billion in 2024. The agreement, signed in July last year, is expected to double bilateral trade from the present level of around 48 billion pounds annually by 2030, while encouraging investment, technology partnerships and long-term economic growth.

The government said the agreement would improve the competitiveness of Indian exports, create opportunities in labour-intensive industries such as textiles, footwear and gems and jewellery, and expand market access for India’s information technology, engineering and pharmaceutical sectors.

Commerce and Industry Minister Piyush Goyal said the agreement would open new avenues for trade, investment and innovation, creating fresh opportunities for businesses in both countries.

The United Kingdom described the agreement as a major milestone in bilateral economic relations, stating that consumers would gain quicker and more affordable access to British and Indian products and services. To mark the commencement of the agreement, a British Airways flight delivered a consignment of British goods, including cosmetics, food products and alcoholic beverages, to the British Deputy High Commission in Mumbai, reflecting the immediate implementation of reduced tariff provisions.

British High Commissioner to India Lindy Cameron said the agreement establishes a new benchmark for trade partnerships and highlighted that import duty on Scotch whisky had been reduced from 150 per cent to 75 per cent from Wednesday. She added that import duties on premium UK-built automobiles would gradually decline from more than 110 per cent to 10 per cent, making British vehicles more affordable for Indian consumers.