The Comprehensive Economic and Trade Agreement (CETA) signed by India and the UK last week is New Delhi’s most ambitious free trade agreement (FTA) yet. Tariff cuts—central to the deal—instantly reduce product prices and improve competitiveness for both nations, explains Ajay Srivastava
l What are the gains for India on merchandise exports?
THE FTA MAKES $6.5 billion worth of India’s exports—mainly textiles, footwear, autos, seafood, and fruits—duty-free in the UK, down from earlier tariffs of 4-16%. Another $8 billion worth of exports of products, such as petroleum, pharma and diamonds, already had zero-duty access. Only a few farm items like rice remain excluded. Overall, 99% of Indian goods will enter UK tariff-free.
Trade using CETA concessions may start after about a year. This is because the British Parliament will take some time to approve the deal.
l What are the gains for the UK?
INDIA HAS AGREED to eliminate tariffs on 85% of its tariff lines, with an additional 5% subject to phased reductions. About 64% of its export products to the UK — including lamb, salmon, aircraft parts, and electronics—will get immediate zero-duty access. Tariffs on another 26%, such as chocolates, cosmetics, and auto parts, will be removed over 10 years.
India also agreed to slash tariffs on medical devices, silver, cars, and alcohol.
l What are the duty cuts on UK-built cars?
FOR THE FIRST time in any FTA, India will lower duties on passenger vehicles made in the UK under a Tariff Rate Quota (TRQ). Duties on luxury and mid-size cars will drop from 100%-plus to 10% over 15 years, within quotas rising from 10,000 to 19,000 units by the fifth year. This opens a path for well-known UK luxury brands such as Jaguar and Land Rover, and sets a precedent for future auto concessions to the island nation.
l What are India’s key tariff cut commitments?
INDIA WILL ELIMINATE tariffs on silver ($2.1 billion) in 10 years and turbo-jets ($647 million) in seven years. Iron and steel scrap ($325 million) gets immediate duty removal, while brass scrap ($112 million) and paper waste ($88 million) become duty-free in 10 years. Blended whisky ($107 mn) will see duties fall from 150% to 40%, subject to minimum pricing. Valves and palladium also get phased cuts.
However, telecom gear, aluminium scrap, and gold dore are excluded due to strategic concerns.
l What are the concessions on alcohol from UK?
INDIA WILL CUT duties on alcoholic drinks from the UK —including whisky, vodka and gin—but only for bottles priced above $6 per 750ml. For the qualifying imports, as per the deal, tariffs will fall from 110% to 75% in year one, and to 40% by year ten. Some lines drop from 150% to 75%. Over 30 products are covered under the agreement, giving premium UK spirits better access while shielding low-cost segments.
l What’s excluded from the duty cuts?
INDIA HAS KEPT out sensitive products such as apples, walnuts, whey, cheese, vegetable seeds, gold bars, and smartphones from the list of products where tariffs have been slashed. The UK excluded meat products, rice, sugar, and processed meats. These reflect both countries’ domestic political sensitivities and sectoral protection priorities.
l How big is India-UK trade?
IN FY 2025, bilateral trade hit $54.9 billion, with India running an $11.7 billion surplus. India exported $14.5 billion worth of goods and $18.4 billion worth of services, while importing $8.6 billion in goods and $12.6 billion in services from the UK.
The UK is India’s second-largest IT and business services market after the US.
l What are India’s key exports & imports?
INDIA’S KEY EXPORTS to the UK include smartphones ($1.48 billion), aviation fuel ($1.29 billion), turbo-jets ($799 million), pharmaceuticals, silver bars, rice, diamonds, and textiles.
On the import side, silver bars ($2.1 billion) top the list, followed by turbo-jets, metal scrap, telecom gear, gold dore, brass scrap, and alcohol, showing the UK’s industrial strength.
The writer is founder, Global Trade Research Institute