India UK FTA: A trade deal that puts India first

In the world of global diplomacy, trade agreements are judged not merely by the tariffs they remove, but by the strategic message they convey. The India–UK Comprehensive Economic and Trade Agreement (CETA), finalised on July 24, 2025, does precisely that — it signals India’s arrival as a confident, assertive economic power on the world stage. This agreement was signed by the Modi government and is not just another free trade agreement; it is the most comprehensive and transformative deal India has ever signed with a developed nation. By securing sector-specific gains, protecting national interests, and reinforcing India’s global stature, CETA marks a definitive shift in India's trade diplomacy — from a passive rule-taker to a proactive rule-shaper.

India and the UK — respectively the 4th and 6th largest economies — began negotiations in January 2022. India has delivered a free trade pact that provides 99% duty-free access to Indian exports entering the UK from day one — covering nearly the entirety of trade value. Especially labour-intensive sectors like textiles, leather, footwear, gems & jewellery, toys, and marine products will enjoy zero-duty access, powering export growth and job creation across multiple states. The agreement is forecast to raise bilateral trade to $120 billion by 2030, compared with around $20.5 billion in 2024.

Unlike past governments that signed FTAs without reciprocal access — such as with Japan, where India’s imports surged while exports lagged — this agreement ensures India’s interests come first and that our trade policy is guided by strategic reciprocity, not blind liberalisation.

Textiles, which previously faced tariffs up to 12%, are expected to see a 30–45% jump in exports by 2030, benefitting hubs like Tirupur, Surat, and Ludhiana. For instance, the UK imports $29 billion worth of textiles annually, but India currently exports just $1.73 billion. That gap is now India’s opportunity. Similarly, leather and footwear, where India exports just $470 million against UK’s $9.9 billion import demand, will now attract zero duties, having previously faced up to 16%. In gems and jewellery, India will compete in a $78 billion UK market with duty-free access, up from the earlier 4% tariffs.

In processed food, tariffs have been slashed across 70% of lines, with 99% of tariff lines now at zero duty. India currently exports just $210 million worth of processed food to a UK market worth $34 billion — now poised for dramatic expansion.

Marine products like shrimp and tuna now enter the UK duty-free, unlocking a share in its $85 billion agri-import market. India’s farming communities stand to gain significantly from tariff-free access to the UK’s $63.4 billion agricultural market, covering meats, dairy products, tea, coffee, spices, fruits, vegetables, fruit juices, and processed agri-goods. While unlocking this high-value export opportunity, the agreement also takes full account of the interests of Indian producers of sensitive items — such as dairy, apples, edible oils, and oats — by keeping them under the sensitive list.

India’s approach to market access has been prudent. For example, in the automobile sector, concessions are limited to high-end vehicles, while protecting India's leadership in small and mid-sized ICE vehicles and EVs. In fact, India secured four times more EV export quota into the UK than it offered in return — a clear win for strategic leverage. No market access is provided to vehicles priced below £40,000, ensuring full protection to India’s mass-market EV segment.

The pharmaceutical and chemical sectors are also major beneficiaries. Although India exports $30 billion worth of pharma globally, only $1 billion goes to the UK. That’s set to change, as the UK imports around $30 billion annually — offering immense untapped potential. Similarly, chemical exports that once faced tariffs up to 8% will now enjoy full duty-free access to a $28 billion UK market.

Medical device manufacturers, especially those in surgical and diagnostic equipment, will benefit from tariffs being cut from 2–6% to zero. This positions Indian medtech exports competitively in a $32 billion UK market, expected to double by 2035.

This FTA includes the most expansive services commitments ever given by the UK — opening up 137 sub-sectors including IT/ITeS, finance, education, legal services, and architecture. Independent professionals — such as those in R&D, computer services, and consulting — will now access UK markets more easily, generating jobs and raising incomes.

A unique win under this deal is the mobility of Indian cultural and culinary professionals. For the first time, up to 1,800 Indian chefs, yoga instructors, and classical musicians will be allowed to temporarily work in the UK each year — enhancing India’s global cultural footprint.

The Double Contribution Convention (DCC) is a game-changer. It will benefit around 75,000 Indian workers, who will now be exempt from contributing to the UK’s National Insurance for up to three years. This will save Indian professionals and their employers over $500 million annually. Additionally, Indian employees working temporarily in the UK will now be able to contribute directly to their Indian Provident Fund (PF) — a big win for long-term savings and retirement security.

The deal also brings procurement reform. Indian firms now have access to the UK’s $122 billion public procurement market, including contracts from the NHS, IT services, infrastructure projects, and more. Importantly, India has excluded sensitive areas like defence procurements, agricultural support programmes, and affirmative procurement policies for Micro and Small Enterprises (MSEs). India’s Public Procurement Policy for MSEs, 2012, remains protected. Further, India has committed to greater transparency, agreeing to publish procurement data on platforms like the Central Public Procurement Portal (CPPP) and GeM.

In a historic first, CETA includes a dedicated chapter on gender — marking a progressive shift in India’s trade diplomacy. The agreement’s preamble explicitly affirms the goal of enhancing women’s access to economic opportunities, with special focus on women from rural areas, marginalised communities, and economically vulnerable backgrounds. The gender chapter outlines cooperation measures such as gender-disaggregated data collection, improving market access for women-led enterprises, and organising trade missions to connect women entrepreneurs with global buyers.

The agreement also includes a labour chapter, reaffirming both sides’ commitments to internationally recognised labour rights under ILO standards, including the freedom of association and prohibition of forced labour. While it does not mandate any changes to India’s domestic labour laws, it reflects a shared commitment to dignity at work and inclusive trade.

India has transitioned from being a passive trade participant to a confident global negotiator. The India–UK CETA is not just about tariffs or quotas — it is about asserting India's strategic, economic, and moral position on the world stage. It balances domestic priorities with global opportunity, protects the vulnerable while promoting the ambitious, and sets a new gold standard for how India will craft its future trade agreements with developed nations.

In essence, CETA is not just a free trade agreement — it is a blueprint for Atmanirbhar Bharat, powered by innovation, equality, and aspiration.

(Views are personal; the author is the National Spokesperson for Bhartiya Janata Party)