After years of back-and-forth talks, on 24 July 2025, India finally signed a historic Free Trade Agreement (FTA) with the United Kingdom. Officially titled the Comprehensive Economic and Trade Agreement (CETA), this India-UK trade deal marks India’s 16th major trade deal and promises to eliminate tariffs on nearly 99 percent of Indian exports to the UK. For Indian exporters in textiles, footwear, gems, and seafood, this could open new opportunities. For consumers, it means cheaper British cars, whisky, and tech devices. And for professionals, especially chefs, musicians, and IT consultants, it signals easier work permits and no double social security charges. 

Let’s see what benefits it would bring for you, India’s economy, and why this is being seen as a “win-win.”

India–UK Trade Deal Benefits

• Indian exports will enter UK markets almost completely duty-free
• British cars, whiskey, and cosmetics will become cheaper in India
• New job opportunities expected in textiles, toys, seafood, and more
• Indian farmers to gain better UK market access for their produce
• Shrimp and tuna exports from coastal states are set to get a big boost
• Indian coffee, tea, and spices will now compete better on UK shelves
• Indian professionals can work in the UK for 2 years without an office setup
• No social security contributions needed for Indian workers in the UK for 3 years
• Pharma and medical devices from India to see zero import duty
• Women-led crafts like handlooms and Kolhapuri chappals will now enjoy tariff-free entry into the UK’s market.

What’s Getting Cheaper for the UK and India?

What India Gains	What the UK Gains
Zero Duty on Processed FoodsMango pulp, pickles, pulses, and cereals now enter the UK duty-free. Earlier, tariffs were up to 70%.	Lower Duties on Whisky & CarsHigh-end UK whisky and cars to get cheaper in India, but only if they meet minimum import price limits.
Textiles and Footwear BoostHandlooms, garments, and leather shoes can now be exported without tariffs.	Cheaper British Consumer GoodsCosmetics, soft drinks, and medical devices will now attract just 3% duty instead of 15%.
Marine & Animal ProductsShrimp, fish, meat and dairy will now reach UK buyers at zero duty.	Access to Indian Government ContractsUK firms can now bid under ‘Make in India’ if they use 20% locally sourced materials.
Jewellery and Base MetalsItems like gems, jewellery, aluminium, and steel to becoming more competitive in the UK.
Electronics and MachineryRubber goods, tools, and electrical products to find better market access.

What Is a Free Trade Agreement (FTA)?

A Free Trade Agreement is a deal between two or more countries where they agree to reduce or eliminate customs duties on a wide range of goods and services. It also usually includes measures to promote services, investments, and cooperation across industries.

In the case of the India-UK Free Trade Agreement, the countries have agreed to:

• Remove or reduce tariffs on a large number of goods
• Ease investment restrictions
• Improve job opportunities and social security for professionals working in each other’s countries

This makes it cheaper to sell and buy things between the two countries.

This deal has been in discussion since 2007, but was delayed due to:

• Tough negotiations around Indian agriculture and autos
• The UK’s Brexit process
• Changing political leadership in the UK (three different Prime Ministers since 2022)
• A missed Diwali deadline in 2022 set by Boris Johnson

Eventually, it was finalised in May 2025 and signed in July 2025 after Keir Starmer’s Labour Party came to power.

With the India–UK FTA, tariffs on over 99 percent of Indian exports will be wiped out. 

What Does the India-UK Trade Deal Bring for India?

For years, Indian businesses have struggled with tough UK tariffs. 

Now, that’s changing.

1. Massive Tariff Elimination on Exports

Indian products will now enter the UK with zero or minimal duties. This is expected to benefit almost 99 percent of Indian exports.

Some of the major Indian export categories that will now enjoy zero duty access include:

Export Category	Previous UK Duty	New Duty After Deal
Marine Products	Up to 20%	0%
Electrical Machinery	Up to 14%	0%
Gems and Jewellery	Up to 4%	0%
Leather and Footwear	Up to 16%	0%
Textiles and Clothing	Up to 12%	0%
Transport/Automobiles	Up to 18%	0%
Arms and Ammunition	Up to 2%	0%

• Processed food: mango pulp, pickles, pulses, spice mixes
• Fruits, vegetables, and cereals
• Marine products: shrimp, tuna, fishmeal, seafood feed
• Gems and jewellery
• Textiles and clothing
• Leather and footwear
• Ceramics, headgear, and glass
• Plastics and chemicals
• Mechanical and electronic machinery
• Wood and paper goods
• Base metals and minerals
• Furniture and sports goods
• Spices: turmeric, cardamom, pepper

2. Special Market Access in the Food Sector

Earlier, Indian food exports faced duties as high as 70 percent in the UK. Under the new deal:

• Tariffs on almost 99.7 percent of food tariff lines will now be eliminated
• This gives a significant edge to processed and packaged food exporters in India

3. A Push for Labour-Intensive Sectors

Sectors like textiles, gems, jewellery, leather, and footwear are huge job creators in India. The removal of duties will make Indian goods more competitive in the UK market, supporting job growth and boosting income for small businesses and MSMEs.

4. Marine and Animal Products Get Full Access

Exports of shrimp, fish, meat, and other animal products will now face zero duties. Tariffs that ranged from 10 to 20 percent have been fully removed.

What Has India Protected?

India ensured that sensitive domestic sectors remain protected. The country excluded the following from tariff reductions:

• Dairy products
• Edible oils
• Apples

This protects the interests of Indian farmers and rural economies, preventing an influx of cheap imports in these segments.

What Is the UK Getting?

While India benefits largely from export boosts, the UK also gains in several areas:

1. Lower Duties on Whisky and Premium Alcohol

India currently imposes a 150 percent base customs duty on imported alcohol.

Under the India-UK free trade agreement FTA deal:

• UK-origin spirits like whisky, brandy, vodka, rum, and tequila will see gradual reductions
• For high-quality imports (priced above $6 for a 750 ml bottle), the duty will drop from 110 percent in Year 1 to 75 percent by Year 10

This means premium UK liquor will become cheaper for Indian consumers, while local low-cost products remain protected.

2. Access to India’s Automobile Market

Luxury British cars will become more affordable in India:

• Tariffs on UK cars will be reduced from up to 110 percent down to 10 percent
• Aerospace and electrical machinery duties will also fall significantly

This benefits companies like Jaguar, Land Rover, and Rolls-Royce, giving them more reach in India’s growing luxury market.

Explore top Nifty Auto Companies in India!

3. Entry Into Public Procurement

For the first time, India has allowed UK firms to bid in certain government tenders, under a ‘Class Two’ category. They will need to ensure at least 20 to 50 percent local value addition in India to qualify.

This is considered one of India’s most generous concessions in any trade deal and may set a precedent for future agreements with larger economies.

India-UK Trade Deal- Impact on Services and Investments?

The agreement includes chapters on services, innovation, government procurement, and intellectual property rights.

• A Double Contribution Convention has been agreed upon. Indian professionals working temporarily in the UK won’t have to pay double social security contributions
• UK patent holders can now offer voluntary licences in India, which has raised some concerns among access-to-medicine advocates
• Discussions are ongoing on a Bilateral Investment Treaty (BIT), which is expected to help British firms invest in India more securely

Why It is Being Called a “Step Change”

The UK government projects that this agreement will boost its economy by £4.8 billion annually and attract £6 billion in investments.

For India, the deal is expected to:

• Strengthen export-driven industries
• Generate more jobs in textiles, food processing, and fisheries
• Increase foreign investment in key sectors like infrastructure and fintech
• Help Indian professionals avoid double social security contributions when working in the UK

It also sets a new global benchmark, being the most generous FTA India has offered to date in terms of public procurement and tariff relaxations.

What’s Next?

This deal is more than just a trade agreement. By protecting its farmers, boosting key job sectors, and securing long-term economic partnerships, India has taken a great initiative.

What You Should Do Now

• If you export Indian food, textiles, or leather, you could explore UK markets now
• If you’re a fintech, infra, or med-tech startup, you must watch for investment opportunities
• If you love premium whisky or British cars, you can expect lower prices soon (but gradually)
• If you’re an Indian professional planning to work in the UK, you need to check the Double Social Security Contribution Agreement benefits
• If you’re an investor, it’s worth tracking the stock market closely. Sectors like pharma, auto, and IT may not see immediate rallies from this deal, but it could influence long-term investor sentiment and portfolio strategies.

Source: Mint

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