India and the United Kingdom have enacted a new Comprehensive Economic and Trade Agreement as of Wednesday, aimed at reducing tariffs on thousands of goods while opening up broader business prospects for both nations. This agreement significantly benefits Indian exporters by granting duty-free access to most British tariff lines, particularly aiding industries such as textiles, leather, footwear, marine products, gems and jewellery, and processed foods. Indian authorities anticipate a rise in exports due to enhanced competitiveness in markets previously hindered by British tariffs ranging from 4% to 20%.
For the UK, the deal means increased access to India’s booming economy through gradual tariff reductions and quotas in sectors like automobiles and silver. Additionally, it broadens opportunities in areas such as procurement, financial services, insurance, education, and professional services. Under the new agreement, the UK will immediately eliminate duties on 96.8% of its tariff lines, accounting for 97.7% of trade by value. In contrast, India will abolish tariffs on 64.1% of its tariff lines immediately and plans to phase out duties on another 21% over time, while safeguarding its sensitive sectors.
Trade between India and the UK has been on an upward trajectory in recent years. During the 2025-26 fiscal year, India exported goods worth $13.44 billion to Britain and imported goods valued at $11.68 billion. The bilateral services trade reached $35.44 billion in 2024, with India holding a services surplus of nearly $7.9 billion. Among the sectors expected to gain the most from this agreement is India’s engineering sector, which exported goods worth $4.7 billion in 2025-26 and is projected to exceed $7.5 billion by the 2029-30 fiscal year.
The agreement’s services component spans 137 sub-sectors, covering information technology, telecommunications, finance, business services, and education. It also simplifies the rules for temporary entry for business travelers, investors, and professionals, facilitating smoother cross-border movement. Additionally, a Double Contribution Convention included in the deal exempts eligible Indian professionals and employers from contributing to Britain’s National Insurance system for up to five years, a change that will benefit approximately 75,000 workers and 900 employers.
Moreover, the agreement opens up government procurement opportunities in both countries, granting Indian companies access to British contracts and creating reciprocal chances for British businesses in India. This development is expected to further enhance the economic ties and cooperation between the two nations.