The India-UK Free Trade Agreement (FTA), officially known as the Comprehensive Economic and Trade Agreement (CEPA), is poised to be a landmark deal that will significantly benefit India’s export sector by offering zero duty on approximately 99% of Indian exports to the UK.

This unprecedented tariff elimination promises to make Indian products highly competitive in the UK market and is expected to substantially boost bilateral trade between the two nations, targeting a doubling from around USD 60 billion in 2024 to USD 120 billion by 2030.

Key highlights and impacts of the FTA for India are:

Tariff Elimination And Market Access: 99% of Indian export tariff lines to the UK will face zero duties, covering nearly the entire trade value of India’s exports to the UK. This represents a wide range of sectors including textiles, leather, footwear, sports goods, toys, marine products, gems and jewellery, engineering goods, auto parts, engines, and organic chemicals, among others. Such comprehensive market access is set to enhance the cost competitiveness of Indian goods substantially in the UK market.

Job Creation And Economic Growth: The deal is expected not only to expand export volumes but also to create significant new employment opportunities in India, especially in labour-intensive industries such as textiles and leather production. This aligns with India's strategic focus on employment generation and economic growth in these sectors.

Reduction of Tariffs On Imports From The UK: India will phase-wise reduce tariffs on 90% of its imports from the UK. Immediate tariff cuts will affect 64% of the tariff lines, benefiting sectors such as British food and drinks (notably Scotch whisky and gin), advanced machinery, medical devices, aerospace components, and luxury cars. This is intended to promote bilateral trade balance and provide Indian consumers access to a wider variety of goods at competitive prices.

Challenges In Automotive Sector: While the FTA will reduce automotive tariffs from over 100% to 10% under a tariff rate quota, concerns remain about the impact this might have on India’s domestic automobile industry and the ‘Make in India’ initiative. Indian manufacturers of electric and hybrid vehicles like Tata Motors and Mahindra Electric are expected to benefit, but competition may increase significantly.

Service Sector And Mobility: Beyond goods, the FTA incorporates commitments for services including IT/ITeS, financial services, professional services (architecture, engineering), and education. It also simplifies mobility for Indian professionals by offering a three-year exemption from social security contributions in the UK for temporary Indian workers and facilitating easier visa access for contractual service providers such as yoga instructors, chefs, and musicians.

Simplification of Trade Procedures: The agreement introduces streamlined customs procedures such as deferred duty payments, electronic documentation, expedited clearance, and greater transparency in trade norms to facilitate smoother trade.

Future Negotiations: Some complex issues such as detailed quotas for automobiles and carbon border taxes are still being negotiated separately. Additionally, negotiations on a Bilateral Investment Treaty (BIT) are ongoing.

The FTA was ratified by the Indian Union Cabinet on July 22, 2025, and is set to be formally signed in London in the presence of Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer during Modi’s official visit. The UK Parliament’s ratification process will follow. Both sides regard this FTA as a strategic step enhancing comprehensive economic partnership, innovation collaboration, and people-to-people ties, strengthening the relationship between the two nations.

The India-UK Free Trade Agreement offers India dramatic export opportunities via near-total zero tariffs on Indian goods entering the UK, expected to stimulate trade growth, bolster manufacturing and service sectors, and open pathways for greater investment and professional mobility while consolidating the bilateral relationship.

Based On ANI Report