The Comprehensive Economic and Trade Agreement (CETA) was signed between Prime Minister Narendra Modi and his UK counterpart Keir Starmer in July last year, following 14 rounds of negotiations. It is expected to at least double the trade between the two countries from the current annual levels of an estimated 48 billion pounds by 2030, and also boost their GDPs by nearly 5 billion pounds every year in the long run, the report said.
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UK government estimates cited separately by British authorities put the long-term GDP gain even higher, at up to 4.8 billion pounds by 2040, alongside a projected 25.5 billion pound rise in bilateral trade.
What the deal actually does?
The CETA spans 30 chapters covering trade in goods and services, digital trade, financial services, intellectual property, innovation, sustainability, labour, environment, gender and government procurement. Officials have called it India’s most ambitious FTA to date, citing its scale of tariff elimination and wide sectoral coverage.
On the UK side, duties will be eliminated on 99% of Indian tariff lines from Day 1, covering nearly the entire value of India’s exports to Britain. This includes existing UK tariffs of up to 70% on processed foods, 21.5% on marine products, 18% on engineering goods and auto components, 16% on leather and footwear, 12% on textiles and clothing, and 8% on chemicals and pharmaceuticals. Duties on gems and jewellery are being scrapped entirely. Labour-intensive sectors such as textiles, leather, footwear, marine products, and toys are expected to be among the biggest beneficiaries, along with engineering goods and organic chemicals.On the Indian side, 64% of UK tariff lines get zero-duty access immediately, rising to 85% over the next decade. Notably, India will cut tariffs on UK automobiles from over 100% to 10%, subject to import quotas, while duties on Scotch whisky and gin drop from 150% to 75% on Day 1, with a staged reduction to 40% by year ten under a 2 million litre annual quota. British goods like whisky, gin, chocolates, biscuits and cosmetics are expected to get cheaper in India as these cuts phase in.
The pact also includes a Double Contribution Convention (DCC) on social security, which exempts Indian professionals on temporary UK assignments from making dual social security contributions, extending the exemption window from three to five years. The Commerce Ministry estimates this will benefit over 75,000 Indian professionals and more than 900 companies. Other features include self-certification of origin, enhanced mobility commitments for professionals, and for the first time, access for UK companies to defined segments of India’s government procurement market, including transport infrastructure, healthcare and energy.
Bilateral goods trade stood at $25.12 billion in FY26, with India’s exports at $13.44 billion and imports at $11.68 billion, per Commerce Ministry data. Services trade between the two countries touched $35.44 billion in 2024.
Industry reaction
“The agreement will make it easier for our businesses to trade, invest and grow, while creating new opportunities across financial and professional services,” Dame Susan Langley, Lady Mayor of the City of London, told PTI.
Referencing her recent visit to India, the global ambassador for the UK capital’s financial hub said she witnessed the scale of opportunity in one of the world’s fastest-growing major economies first hand, as she dubbed CETA as a “landmark moment” for both nations.
“The City of London will support India’s growth ambitions through global expertise in sustainable finance, insurance, capital markets and fintech. This agreement is the start of a brilliant journey, within an ambitious partnership. I look forward to seeing greater flows of investment, innovation and talent between our two countries in the years ahead,” she said.
From aerospace to food and healthcare to financial services, CETA has been described as one of the most comprehensive trade deals that India has ever agreed to. It will support industries employing millions, such as textiles, footwear and engineering goods.
“Well, happy birthday to CETA, the much awaited agreement that is going to catalyse the trade and economy between two great nations, Great Britain and India,” said Dr Kishore Jayaraman, Group CEO of the UK India Business Council (UKIBC). “It is a day that the industry has been looking forward to, one that will put us on the right growth curve for the future,” he said, adding that UKIBC will double down with industry partners and governments on both sides to leverage the benefits flowing from CETA.
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“We are now in the execution phase of this deal. The potential for both countries is enormous. The quoted figure is about 25 billion pounds increase in trade per year, but that is perhaps an underestimate of what it could potentially be,” said Anuj Chande, Partner at Grant Thornton UK and Head of its South Asia Business Group.
Based on the group’s annual ‘India Meets Britain Tracker’ analysis, Chande expects a significant bounce in the number of Indian companies operating in the UK, doubling from the current levels of around 2,000 by 2030. “The volume and size of investment will increase immensely,” he predicted, highlighting technology as a “forerunner sector” alongside defence, advanced manufacturing and life sciences.
Tanuj Kapilashrami, Group Chief Operating Officer at Standard Chartered, hailed the FTA as a “landmark step forward for one of the world’s most important growth corridors.” “By reducing trade tariffs, expanding market access and providing greater certainty for investors, it will create new opportunities for businesses of all sizes to invest and grow. Just as importantly, its digital and trade facilitation provisions will help make cross-border commerce faster and more efficient,” said Kapilashrami. The bank’s chief pointed out that the real opportunity would now lie in turning the agreement into “tangible outcomes, with businesses that act early best placed to capture the benefits this deal unlocks”.
Ani Kaprekar, co-founder of Tech India Advocates and Senior Counsel for India at Trafalgar Strategy, expressed excitement that the pact is now in force. “The UK-India relationship has never lacked ambition. The FTA coming into force is not the finish line, it’s the starting signal. The agreement creates the bridge; it is now up to businesses, innovators, investors and creators to cross it,” he said.
For Cyrus Vandrevala, a global investor and co-founder of Intrepid Capital Partners, CETA is a “strategic growth architecture” between two economies with highly complementary strengths. “India offers scale, talent, entrepreneurship and one of the world’s most dynamic consumer markets, while the UK brings capital depth, institutional credibility, research capability and global market connectivity,” said Vandrevala. “For investors, the real opportunity lies in sectors where structural demand, technology and human impact converge, including AI, healthcare, food and nutrition, financial services and advanced services. This agreement creates the predictability and access required to back companies with cross-border ambition,” he said, highlighting the benefits in store for early movers who can build “trusted partnerships and convert bilateral market access into global scale”.
According to a UK parliamentary analysis, businesses have faced “considerable barriers” to India’s market, with average tariffs of 12% in 2024 and some individual products such as beverages and tobacco facing duties as high as 150%, textiles 255%, and transport equipment 125%.
Commerce and Industry Minister Piyush Goyal, in London with a large business delegation last month to build momentum around CETA, had referenced its entry into force this week as the opening of the “floodgates” to greater trade and business.