India and the United Kingdom will bring their Comprehensive Economic and Trade Agreement (CETA) into force from July 15. The pact marks a major milestone in bilateral trade relations, aimed at expanding market access, reducing tariffs, and deepening cooperation across goods and services. The agreement is expected to reshape trade flows between the two economies by offering structured tariff reductions, quota-based access in sensitive sectors, and improved mobility provisions for professionals. Preparations are under way to ensure customs notifications and implementation systems are also ready, according to officials cited by ANI.
Market Access Expansion and Overall Gains
The agreement is expected to open a market worth over $500 billion for Indian exporters, with officials indicating improved access across goods and services segments. India is projected to gain tariff advantages of around 7–10 per cent compared with existing trade conditions, alongside long-term elimination of duties on over 99 per cent of tariff lines under the phased liberalisation schedule. The CETA will also introduce a hybrid structure combining tariff reductions and quantitative limits for sensitive goods. While most tariff lines are expected to move toward zero duty over time, select sectors will remain under quota controls to manage import exposure, reported ANI. This includes automotive products and other industrial categories where staged liberalisation has been adopted.
Automotive Sector Commitments
India will permit phased imports of up to 3.78 lakh conventional-engine passenger vehicles from the UK over a 15-year period under a quota system. Import duties in select categories will decline from about 110 per cent to 10 per cent over the implementation period. The structure includes differentiated treatment based on engine size and vehicle category, with annual import caps and gradual expansion of quotas, reported PTI. The agreement provides limited access for electric, hybrid, and hydrogen-powered vehicles from the sixth year onward, subject to price bands and quota ceilings. While higher-end segments will see gradual tariff reductions, mass-market electric vehicles below a specified price threshold remain excluded from concessions, reflecting India’s protection of its domestic EV segment.
Whisky and Spirits Tariffs
The agreement will significantly reduce import duties on UK whisky and gin, with tariffs set to fall from 150 per cent to 75 per cent initially and further to 40 per cent by the tenth year of the pact. Industry bodies representing alcoholic beverage makers have welcomed the move, saying it could strengthen bilateral trade, support premiumisation, and benefit the spirits value chain. The International Spirits and Wines Association of India (ISWAI) said lower duties on Scotch whisky imports, including bulk Scotch used for bottling and blending in India, would create value across the industry while expanding consumer choice. Nearly 79 per cent of Scotch imported into India is used by domestic manufacturers for blending and bottling operations, according to the industry body. However, the Confederation of Indian Alcoholic Beverage Companies (CIABC) urged state governments to withdraw concessions currently extended to bottled-in-origin imported brands, arguing that lower import duties coupled with state-level incentives could make imported products cheaper than domestically manufactured alcoholic beverages, as quoted by PTI.
Steel Sector Safeguards
India’s concerns regarding UK steel safeguard measures have been addressed in the final agreement, according to ANI sources. Around 85 per cent of India’s steel exports are expected to remain outside the scope of restrictive measures, while concessions have been secured across 188 tariff lines. Officials said India will continue WTO-level engagement on remaining issues, ANI reported.
Social Security Agreement for Professionals
Under the Double Contribution Convention (DCC), Indian professionals temporarily posted in the UK will be exempt from social security contributions for up to five years. The arrangement is expected to reduce cost burdens for Indian IT and services firms, improve competitiveness, and align conditions with other countries that already have similar agreements with the UK, PTI reported.
Services Trade and Investment Linkages
The agreement is expected to significantly boost exports in services sectors including information technology, financial services, education, and professional consulting. It also aims to facilitate deeper investment flows, with over 900 Indian companies currently operating in the UK and bilateral trade showing steady growth in recent years.
Regulatory Coordination and Outstanding Areas
Discussions on the UK’s Carbon Border Adjustment Mechanism (CBAM) remain ongoing as the regulatory framework is yet to be finalised. Officials indicated that both sides will continue consultations on emerging trade-related environmental regulations while implementing the core provisions of the CETA.
