the story So Far:After announcing the conclusion of the conversation on the deal in May this year, India and the UK on Thursday signed a comprehensive economic and trade agreement (CETA). With a conversation starting in January 2022, the deal marks more than three years of effort to increase bilateral trade between the two countries.
What have been roughly agreed?
Under the deal, the UK has removed the tariff at 99% of its product lines. However, all these product lines are not exported by India to the UK, according to the analysis of the global trade research initiative, about 6.5 billion dollars or 45% India currently exports to the UK-like fresh fruits such as garments, shoes, carpets, automobiles, seafood, and grapes and mangoes will enter UK duty-Fi. The remaining $ 8 billion worth of goods that exports to the UK – petroleum, pharmaceuticals, diamonds and aircraft components – already enjoy zero duty access. India has agreed to either end or reduce duties at 90% of its tariff lines, according to the UK government data, about 92% of the UK is exported to the UK. Alcohol from the UK, especially whiskey, is ready to be cheaper in India, as British cars and engineering products.
The UK is a relatively small trading partner for India. In 2024–25, about 3.3% of India’s exports moved to UK, and the UK created 1.2% of India’s imports that year.
Is the deal limited to goods trade?
No, CETA incorporates an important section on services, especially interested in India as exports of services are an important engine of development. Under the ‘Economic’ component of the deal, India has agreed to open some major sectors of its service economy, such as accounting, audit, financial services, telecommunications and environmental services.
This means that UK companies working in these areas can offer their services to Indian customers, which are first without establishing a local appearance here. Despite this, he will be treated with Indian firms. India has also agreed to recognize the UK’s professional qualifications in law and accounting, but not in legal services.
The UK has agreed to provide commercial presence rights to Indian companies in areas such as computer services, counseling and environmental services. This means that Indian companies working in these areas can establish branches, assistant or representative offices in the UK.
A major positive double contribution for India comes out of the Convention (DCC), a parallel agreement between the two countries, which was interacted simultaneously, and when CETA does it, it will apply. Under DCC, UK will allow 75,000 Indian workers to continue paying in the social security system of India without paying the same in the UK, which is very beneficial for Indian workers in the UK as many of them work there for such work when they do not get the benefit of social security benefits to contribute to it.
Is the deal a standard one or does it contain unusual aspects?
While the broader figure of the deal is very standard, to deal with tariffs and non-tariff obstacles, there are some aspects that are unusual. The first is to do with auto tariff. India, for the first time, has included its tariff cut on imported cars in a business deal.
Luxury petrol cars with large engines imported from Britain to India will see their import duty from the current maximum of 110% to 15 years. However, it is under a quota that starts with 10,000 units and is growing up to 19,000 in the fifth year of the deal. For medium -sized cars, tariffs have been cut off to 50% for quota, which will fall to 10% by year five.
Small cars will enjoy uniform tariff deficiency and growing quota.
According to government sources, the idea behind the quota is to allow the domestic industry to prepare to prepare to compete with Britain’s imports. In addition, newborn industries such as electric vehicles have not been given any duty concession for electric, hybrid and hydrogen-operated vehicles for the first five years.
The other unusual aspect of the deal is that the UK firms will now be allowed to participate in the Indian Central Government’s procurement dialects. India will open contracts of about 40,000 high prices from departments in areas such as central ministries and transport, green energy and infrastructure.
so what next?
The deal does not apply immediately. It needs to be confirmed by cabinets of both countries, a process that can take from six months to one year. For India, the deal also serves as a template for future deals with other economies, such as both the US and the European Union are in different stages of interactions.
Published – July 27, 2025 05:00 AM IST