The India-UK Comprehensive Economic and Trade Agreement (CETA) came into force today on July 15, 2026, marking one of India's biggest free trade agreements in recent years. The agreement provides duty-free access for nearly 99% of Indian exports to the UK while reducing import tariffs on several British products entering India.
Signed on July 25, 2025, the agreement is the sixth free trade pact implemented under the current government.
The agreement provides duty-free access to several labour intensive export sectors that earlier faced tariffs ranging from 4% to 16%.
Key beneficiaries include:
Garments and textiles
Footwear and carpets
Processed food products
Cereals, fruits, vegetables and spices
Fish and meat products
Automobiles and auto components
Machinery and electronics
Fabricated metal products
Ceramics, glass, stone and cement products
The agreement introduces significant tariff reductions for automobiles traded between India and the UK.
For imports into India:
Customs duty on fully built UK passenger cars will be reduced from 110% to 10% in phases.
Petrol and diesel vehicles will receive tariff benefits immediately.
Electric, hybrid and hydrogen-powered passenger vehicles will become eligible from the sixth year.
India will allow imports of 3,78,000 conventional-engine passenger vehicles from the UK at concessional duties over the first 15 years.
Duties on completely built trucks will decline from 44% to 8.8% within quota limits by the fifth year.
The UK has also agreed to provide preferential access for eligible Indian-made electric, hybrid and hydrogen-powered passenger vehicles within specified quotas.
Several British products are expected to become more competitive in India as import duties decline over time.
These include:
Salmon and lamb
Chocolates and soft drinks
Cosmetics and perfumes
Soaps and shaving creams
Nail polish
Machinery and electronics
India has also agreed to phase out tariffs on silver imports from the UK over 10 years.
One of the key provisions is the Double Contribution Convention, under which Indian employees temporarily posted to the UK will not be required to make social security contributions there for up to 5 years. This is expected to benefit Indian IT companies with overseas operations.
The agreement also allows UK companies to bid for around 40,000 high-value central government procurement contracts across sectors such as transport, infrastructure and green energy.
The agreement also includes several additional measures:
Import duties on premium alcoholic beverages, including Scotch whisky, will gradually decline over time.
India has excluded sensitive products such as fresh apples, walnuts, gold bars and smartphones from tariff concessions.
The UK has retained protection for selected agricultural products, including certain meat products, rice, and sugar.
Rules of Origin have been included to ensure tariff benefits apply only to goods genuinely produced in India or the UK.
India retained important intellectual property safeguards, including the right to issue compulsory licences during emergencies.
Bilateral trade between India and the UK increased 8.62% to $25.12 billion in FY2026 from $23.13 billion in FY2025.
During FY2026:
India's exports to the UK stood at $13.44 billion.
Imports from the UK rose to $11.68 billion.
UK foreign direct investment (FDI) into India increased to $1 billion, compared with $795 million in the previous financial year.
The India-UK Comprehensive Economic and Trade Agreement is now in effect, bringing tariff reductions, wider market access and sector-specific benefits for exporters, manufacturers, IT companies and consumers. The agreement also strengthens trade and investment ties between the two countries while retaining protections for sensitive sectors.
Read stock market news in Hindi. Head to Angel One's share market news in Hindi for comprehensive coverage.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Jul 15, 2026, 8:40 AM IST
Rakesh Deshmukh
Rakesh Deshmukh is a financial content specialist with around 3 years of experience writing impactful content across equities, mutual funds, IPOs, and personal finance. At Angel One, he decodes real-time market trends and breaking news, helping investors and traders stay updated. He also helps investors make informed decisions by simplifying market fundamentals and technical analysis. He holds a bachelor’s degree in commerce.
Know MoreWe're Live on WhatsApp! Join our channel for market insights & updates
Get the link to download the App
