The India-UK free trade agreement will remove a major tariff disadvantage faced by Indian exporters, but market access alone may not deliver a sustained increase in shipments unless the country simultaneously strengthens testing, certification, logistics and commercial links with British buyers, the Global Trade Research Initiative (GTRI) said on Saturday.
The Comprehensive Economic and Trade Agreement (CETA), signed in July last year, will come into force on July 15. It will provide duty-free access to nearly 99% of Indian exports to the UK, covering almost the entire value of the country’s current shipments.
At present, only 48.2% of India’s export value enters Britain at zero duty under the UK’s most-favoured-nation regime, according to the commerce ministry.
While the execution of the previously agreed upon trade agreement is expected to boost India-UK commerce and grow exports, GTRI in its latest report has cautioned that tariff elimination will not automatically translate into purchase orders until and unless product standards and buyer links are strengthened to meet the UK market criterions.
“Without parallel work on standards, certification, logistics, regulatory approvals and buyer networks, much of the opportunity will remain on paper,” GTRI founder Ajay Srivastava said. “The agreement opens the door; India must now convert access into exports.”
A large market, but a small Indian share
The scale of the untapped market is considerable. According to GTRI’s analysis, the UK imported goods worth $928.9 billion from across the world in 2025, but sourced only $15.2 billion from India. India’s share in British merchandise imports was consequently just 1.6%.
The UK, in turn, accounted for only 3.4% of India’s global merchandise exports of about $445 billion during the calendar year.
Low market penetration, however, should not by itself be interpreted as evidence of high export potential, the think tank said.
The opportunity in each sector will depend on the size of British demand, India’s existing production and export strength, its current presence and popularity in the UK market and the tariff advantage created by the agreement.
Official UK data, which uses a different methodology from GTRI to measure national trade, show that total bilateral trade in goods and services reached £47.9 billion (about $64.4 billion) in the 12 months ended December 2025, up 10% from a year earlier.
India was Britain’s 11th-largest trading partner but accounted for only 2.5% of its total trade. The figures also show that services already form the larger part of India’s exports to Britain.
Garments and leather gain an immediate edge
GTRI expects the clearest merchandise-export gains to emerge in labor intensive sectors where India possesses large production capacity and was previously at a tariff disadvantage to competitors that already enjoyed preferential access.
These include garments, textiles, leather, footwear, processed foods, seafood, selected agricultural products and parts of the automotive and engineering sectors.
India exported garments worth $16.3 billion globally in 2025, out of which the country supplied garments worth $1.3 billion to the $21.3 billion UK market. The UK already buys around 8% of India’s global garment exports, indicating established relationships with importers and retailers.
The elimination of duties should help Indian apparel, leather and footwear exporters compete more effectively with suppliers from countries that previously enjoyed lower tariff access. But firms will still need to meet buyer requirements relating to product quality, chemicals used in manufacturing, traceability, labour practices and delivery schedules, GTRI said.
The government has identified textiles, gems and jewellery, leather, footwear, ceramics and artisanal products among the principal labour-intensive beneficiaries of zero-duty access. Machinery, auto components, pharmaceuticals and processed foods are also expected to gain.
Big food opportunity hinges on quality compliance
As per GTRI’s analysis, processed foods present one of the largest gaps between UK demand and India’s existing production capacity.
Britain imported processed food products worth $33.4 billion in 2025 but purchased only $354 million from India, giving Indian suppliers a market share of about 1.1%. India’s global processed-food exports stood at around $10 billion.
As per GTRI, food based products including ready-to-eat meals, bakery and confectionery goods, sauces and ethnic foods could benefit strongly from tariff reductions and Britain’s large Indian-origin population.
However, Indian exporters’ ability to meet UK’s food safety, labelling, and traceability standards will remain critical to materialising the anticipated gains. GTRI also pointed out the need of creating reliable cold-chain and logistics infrastructure to further boost Indian exporters’ access to the UK market.
The agreement does not dilute Britain’s food-safety regime which includes statutory protections covering food safety and nutrition. This means that Indian exporters of seafood, meat, fruits, vegetables and spices would continue to face the same strict sanitary, phytosanitary and nutrition based checks even after tariffs are removed.
For smaller firms, the fixed cost of obtaining approvals and maintaining traceability systems could absorb part of the tariff saving.
Auto exporters face origin, technical tests
The automotive market offers a similarly large but difficult opportunity.
The UK imported vehicles, motorcycles and automotive components worth $92.2 billion in 2025 but sourced only $325 million from India, according to GTRI. India’s share was just 0.4%, despite the country exporting automotive products worth $25.1 billion globally.
Tariff elimination could improve the competitiveness of Indian vehicles, two-wheelers and components. However, manufacturers will have to meet British vehicle-safety, emissions and product-certification requirements and prove that their products satisfy CETA’s rules of origin.
The documentation requirement will be important for industries that use imported components. UK implementation guidance says goods must meet the agreement’s origin rules and carry valid origin declarations dated on or after July 15 before importers can claim preferential tariffs.
Steel illustrates limits of tariff preferences
As per GTRI’s analysis the recently agreed upon FTA may not be enough to guarantee an unrestricted UK market share jump for India’s steel sector. India exported iron and steel products worth $20.5 billion globally in 2025 and supplied $959 million to the UK, giving it a 5.2% share of British imports.
Yet the UK’s tighter steel safeguard regime, reduced quotas and high above-quota tariffs can overwhelm CETA preferences. Trade remedies and future carbon costs add further risks,” the GTRI said. “The opportunity is real, but regulation, quality compliance, environmental rules and procurement matter more than tariffs,” the think tank added.
According to GTRI’s analysis, the central challenge after July 15 will consequently move from negotiating market access to enabling businesses to use it. That would require sector-specific testing facilities, assistance with British approvals and documentation, better market intelligence and stronger connections between Indian suppliers and UK retailers, distributors and industrial buyers.
As per a PTI report, without the trade enabling features of commercial infrastructure, the tariff cuts may benefit established exporters while leaving much of the agreement’s potential untapped, particularly among smaller manufacturers.