The bilateral economic relationship between India and the United Kingdom is poised for a transformative shift as the recently signed free trade pact nears its official activation. According to a senior official, the agreement is expected to come into force during the second week of May.

This follows the formal signing of the Comprehensive Economic and Trade Agreement (CETA) on 24 July 2025, marking a significant milestone in the diplomatic and commercial history of both nations.

Under the provisions of the CETA, Indian exporters are set to receive a substantial boost, with 99 per cent of Indian goods entering the British market at zero duty. Conversely, the Indian market will become significantly more accessible for British manufacturers and producers.

Notable British exports, including automobiles and spirits, will benefit from a structured reduction in tariffs, facilitating a more competitive environment for UK products within the subcontinent.

The implementation of the trade pact is being coordinated alongside another critical bilateral agreement known as the Double Contributions Convention (DCC). This pact is designed to provide financial relief to temporary workers by ensuring they are no longer required to pay duplicate social levies in both jurisdictions. Officials indicate that both the CETA and the DCC are likely to be implemented in parallel, providing a comprehensive framework for both trade and labour mobility.

The overarching objective of the CETA is to foster rapid economic growth, with an ambitious target to double the current USD 56 billion trade volume between the two economies by the year 2030. This growth is expected to be driven by increased market access across various sectors. India has agreed to open its doors to a wide range of British consumer goods, including confectionery such as chocolates and biscuits, as well as cosmetic products.

In exchange for opening its consumer markets, India will secure enhanced access to the United Kingdom for its core export sectors. This includes significant opportunities for the textiles and footwear industries, as well as the gems, jewellery, sports goods, and toy sectors. These industries are expected to benefit from the removal of trade barriers, allowing Indian craftsmanship and manufacturing to reach British consumers more efficiently.

Specific provisions have been made for the Scotch whisky industry, which has long sought lower barriers to the Indian market.

The agreement stipulates that the current 150 per cent tariff on Scotch whisky will be reduced to 75 per cent immediately upon implementation. Furthermore, this duty is scheduled to be progressively lowered until it reaches 40 per cent by the year 2035, representing a major win for British distillers.

The automotive sector will also see a dramatic shift in trade dynamics. India has committed to reducing import duties on British cars to 10 per cent over a five-year period, a sharp decline from the current rates which can reach as high as 110 per cent. This liberalisation will occur under a managed quota system.

Reciprocally, Indian automotive manufacturers will gain dedicated access to the UK market for electric and hybrid vehicles, also within a defined quota framework, aligning the trade deal with global shifts towards sustainable transport.

PTI