India-UK Comprehensive Economic and Trade Agreement (CETA)

New Delhi: On July 24, 2025, India and the United Kingdom signed the Comprehensive Economic and Trade Agreement (CETA), a historic free trade pact that marks a pivotal moment in their economic relations. Formalized in the presence of Indian Prime Minister Shri Narendra Modi and UK Prime Minister Sir Keir Starmer, and signed by India’s Minister of Commerce and Industry, Shri Piyush Goyal, and the UK Secretary of State for Business and Trade, Mr. Jonathan Reynolds, this agreement is poised to double bilateral trade to $120 billion by 2030, from the current $60 billion. This landmark deal, finalized after a decade of negotiations, establishes a new benchmark for modern trade agreements between two leading democracies and global innovation hubs.

Key Highlights of the India-UK CETA

Tariff Elimination and Market Access

The CETA eliminates tariffs on 99% of Indian tariff lines and reduces tariffs on 90% of UK tariff lines, creating significant opportunities for exporters from both nations. This near-total tariff elimination ensures duty-free access for approximately 95% of India’s exports by value, particularly benefiting labour-intensive sectors such as textiles, leather, toys, gems and jewellery, engineering goods, chemicals, marine products, sports goods, and auto parts. For the UK, the agreement opens up the Indian market for high-value products like whisky, salmon, chocolate, and advanced manufacturing sectors, with 64% of UK exports gaining immediate duty-free access, rising to 85% over a decade.

Sectoral Gains for India

The agreement provides substantial benefits for India’s key industries:

• Textiles, Leather, Toys, and Gems & Jewellery: These labour-intensive sectors will see immediate competitiveness due to the removal of UK import tariffs, boosting margins, particularly for micro, small, and medium enterprises (MSMEs).
• Engineering Goods and Chemicals: Duty-free access enhances India’s global competitiveness in these sectors.
• Marine Products: The agreement removes tariffs on a wide range of seafood, including Vannamei shrimp, frozen squid, lobsters, frozen pomfret, and black tiger shrimp, projecting a 70% surge in marine exports to the UK. India’s seafood exports, valued at $7.38 billion (₹60,523 crore) in 2024–25, with $104 million (₹879 crore) to the UK, are expected to capture a larger share of the UK’s $5.4 billion seafood import market, where India currently holds just 2.25%.
• Farming Sector: Traditional farming knowledge receives patent protection, safeguarding India’s agricultural heritage.
• MSMEs: Indian MSMEs gain access to UK government procurement, creating new opportunities for small businesses to compete in a premium market.

Sectoral Gains for the UK

The UK secures significant market access in India:

• Whisky and Alcoholic Beverages: Duties on Scotch whisky and gin, currently at 150%, will drop to 75% immediately and further to 30-40% over a decade, a major win for the Scotch Whisky Association. However, this has raised concerns among Indian state governments, particularly in Maharashtra, Karnataka, and Punjab, where alcohol excise duties are a significant revenue source.
• Salmon, Chocolate, and Advanced Manufacturing: These sectors gain easier access to India’s vast consumer market, boosting UK exports.
• Automobiles: Duties on UK cars, including electric vehicles, will be reduced over time but capped through tariff-rate quotas (TRQs), allowing Indian manufacturers like Tata Motors, Mahindra, and Maruti time to adjust to potential competition.

Non-Tariff Barriers and Customs Simplification

The CETA addresses non-tariff barriers (NTBs) through sanitary and phytosanitary (SPS) equivalence provisions, reducing obstacles for Indian agricultural and marine exports. British recognition of Indian SPS certifications will streamline exports of mangoes, basmati rice, shrimp, spices, and floriculture products, minimizing delays, rejections, and additional testing. Simplified customs procedures further enhance trade efficiency, benefiting exporters on both sides.

Professional Mobility and Services

The agreement facilitates professional mobility for Indian professionals in sectors like IT, finance, engineering, architecture, education, and yoga. It includes:

• Eased Visa Norms: The UK offers an annual quota of 1,800 visas for niche roles like yoga instructors and classical musicians, though broader categories like business visitors and IT professionals were not included, a point of contention for India.
• Recognition of Qualifications: Clearer eligibility criteria and recognition of Indian qualifications in fields like accountancy and engineering enhance opportunities for Indian professionals.
• Double Contribution Convention (DCC): Indian workers and employers are exempt from UK social security contributions for up to three years, reducing costs for Indian businesses operating in the UK.
• Boost to IT and Services: The agreement promotes growth in digitally delivered services, such as architecture and engineering, strengthening India’s global competitiveness.

Technology Transfer and Investment

The CETA encourages technology transfer and increased UK investment in Indian industries, promoting supply chain diversification and reducing India’s dependence on single trade corridors. This aligns with India’s goal of integrating into global value chains while maintaining regulatory sovereignty.

India’s Seafood Industry: A Major Beneficiary

The CETA is a game-changer for India’s seafood industry, which supports the livelihoods of approximately 28 million Indians and contributes 8% of global fish production. The agreement removes tariffs on key seafood products under UK tariff schedule categories marked ‘A’, including:

• HS Code 03: Fish, crustaceans, molluscs, and other aquatic invertebrates (e.g., shrimp, tuna, mackerel, sardines, squid, crab, cuttlefish, frozen pomfret, lobsters).
• HS Code 05: Coral, cowries, Artemia, etc.
• HS Code 15: Fish oils and marine fats.
• HS Code 1603/1604/1605: Prepared or preserved seafood, caviar, extracts, and juices.
• HS Code 23: Fish meal, fish & shrimp feed, and residues used in animal fodder.
• HS Code 95: Fishing gear (rods, hooks, reels, etc.).

These products, previously subject to tariffs ranging from 0% to 21.5%, now enjoy 100% duty-free access, significantly improving cost competitiveness. However, products under HS 1601 (sausages and similar items) remain excluded under staging category ‘U’ and receive no preferential treatment.

In 2024–25, India’s seafood exports reached 1.78 million metric tonnes, valued at $7.38 billion (₹60,523 crore), with frozen shrimp accounting for 66% ($4.88 billion). Exports to the UK were valued at $104 million (₹879 crore), with frozen shrimp contributing 77% ($80 million). With CETA in force, industry estimates project a 70% surge in marine exports to the UK, enabling India to compete with countries like Vietnam and Singapore, which benefit from their own FTAs with the UK. Coastal states like Andhra Pradesh, Kerala, Maharashtra, Tamil Nadu, and Gujarat are well-positioned to capitalize on this opportunity, provided they meet UK SPS standards.

Strategic Trade-Offs and Safeguards

While the CETA offers significant gains, it involves carefully calibrated trade-offs:

• Automobiles: Indian manufacturers worry about future competition from British imports, particularly in luxury and electric vehicle segments, despite TRQs limiting import volumes.
• Alcoholic Beverages: The phased reduction of duties on UK whisky and gin raises concerns about tax erosion and pressure on local liquor brands, prompting the Indian government to promise a compensatory formula.
• Public Procurement: For the first time, India has opened federal-level procurement tenders worth ₹3.3 lakh crore to UK firms, particularly in infrastructure, renewables, and public health. A 20% local content clause aims to protect Indian suppliers, but MSMEs fear competition from large British firms.
• Dairy and Agriculture: British dairy products like milk powder, cheese, and infant formula face restrictive TRQs with long timelines for liberalization, protecting Indian farmer lobbies in Gujarat and Maharashtra. Cereals, oilseeds, and pulses remain largely untouched due to India’s food security concerns.
• Pharmaceuticals: India safeguarded its ability to manufacture generics, avoiding clauses that could threaten public health. The extension of copyright terms to life plus 60 years aligns with UK standards but poses challenges for India’s digital content sector and small publishers.
• No Investor-State Dispute Settlement (ISDS): India’s rejection of ISDS protects it from regulatory litigation and costly arbitration awards.

A Template for Future Trade Deals

The CETA sets a new template for India’s trade negotiations with larger economies like the European Union (EU), European Free Trade Association (EFTA), and the United States. By frontloading gains for Indian exporters and sequencing liberalization of sensitive sectors over a decade, the agreement reflects a post-RCEP maturity in India’s trade strategy. It prioritizes developmental asymmetry, balancing immediate export benefits with long-term safeguards for domestic industries.

The pact’s focus on digital trade, transparency, and good regulatory practices—including digital document recognition and stakeholder consultation—builds trust and ensures long-term partnership stability. Politically, the deal signals India’s readiness to engage in comprehensive trade agreements without compromising regulatory sovereignty, while for the UK, it validates its post-Brexit pivot toward fast-growing economies.

Implementation Challenges and Opportunities

The success of the CETA hinges on effective implementation:

• Capacity-Building: The Indian government must launch awareness campaigns, support exporters in meeting UK standards, and invest in port logistics, testing labs, and certification infrastructure.
• Visa Facilitation: Streamlined visa processes and qualification assessment mechanisms are critical for Indian professionals in IT and finance.
• Safeguards: India must be prepared with safeguard duties and anti-dumping tools to counter potential import surges.
• State Coordination: States like Maharashtra and Karnataka need support to manage alcohol revenue transitions and prepare MSMEs for procurement competition.

Broader Implications

The CETA positions India as a reliable supplier of high-quality, sustainable seafood and other products, enhancing its global trade reputation. It also facilitates diversification beyond traditional partners like the US and China, with the UK serving as a gateway to Europe. Companies exporting to the UK from other countries may view India as an attractive investment destination to leverage duty-free access.

This agreement is not just about trade statistics; it’s about rewriting India’s economic narrative. From the shrimp farms of Andhra Pradesh to the IT parks of Pune, the CETA promises to uplift livelihoods, boost revenues, and integrate India into global value chains on its own terms. As India negotiates with the EU, EFTA, and the US, this deal will serve as a playbook for ambitious, cautious, and strategic trade diplomacy.

In a world of rising trade barriers and geopolitical complexities, the India-UK CETA is a calculated embrace of mutual benefit, setting the stage for a new era in post-colonial economics.

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