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India signed a Free Trade Agreement (FTA) — the Comprehensive Economic and Trade Agreement (CETA) — with the United Kingdom (UK) on Thursday, marking the second such bilateral deal with a European country. The agreement aims to strengthen trade between the two all-weather partners and covers a wide range of products and services.
The deal was signed in London by India’s Union Commerce and Industry Minister, Piyush Goyal, and the UK’s Secretary of State for Business and Trade, Jonathan Reynolds, during Prime Minister Narendra Modi’s visit. It follows an in-principle agreement reached on May 6, 2025. The CETA pact marks the culmination of years of negotiations and heralds a new era in India–UK economic cooperation.
This FTA represents a significant milestone in India’s engagement with major developed economies and reflects the shared commitment to deepening economic integration. As the world’s fourth- and sixth-largest economies respectively, India and the UK’s bilateral engagement carries global economic importance. Negotiations began in January 2022 after then British Prime Minister Boris Johnson and Indian Prime Minister Narendra Modi agreed to enhance trade ties.
Speaking on the occasion, Piyush Goyal said, “This CETA marks a milestone in the trade relations between two major economies, setting an ambitious and balanced framework. It unlocks tariff-free access for 99 percent of Indian exports to the UK, covering nearly 100 percent of trade value — including labour-intensive sectors — advancing the ‘Make in India’ initiative and setting the stage for bilateral trade to double by 2030.”
Earlier, India signed its first-of-its-kind FTA — the Trade and Economic Partnership Agreement (TEPA) — with the European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway, and Switzerland. The TEPA agreement includes a commitment of US$100 billion in cumulative direct capital investment in India and the creation of 1 million jobs over the next 15 years. It is expected to come into effect from October 1, 2025.
A win-win situation
The FTA between India and the UK will benefit both countries, as merchandise imports from each other will become cheaper, resulting in deeper market penetration and stronger export volumes. British Prime Minister Keir Starmer and Indian Prime Minister Narendra Modi held joint discussions covering a wide range of topics. According to British government estimates, the FTA will boost the UK's gross domestic product (GDP) by GBP 4.8 billion (US$6.5 billion) annually. Indian exports to the UK are expected to double to US$56 billion by 2030.
The CETA secures unprecedented duty-free access for 99 percent of India’s exports to the UK, covering nearly the entire trade basket. This is expected to open new opportunities for labour-intensive industries such as textiles, marine products, leather, footwear, sports goods, toys, and gems and jewellery, as well as fast-growing sectors like engineering goods, auto components, and organic chemicals.
The services sector, a key driver of India’s economy, will also benefit significantly. The agreement provides enhanced market access in information technology (IT) and IT-enabled services, financial and legal services, professional and educational services, and digital trade. Indian professionals — including those deployed by companies across all service sectors, as well as those on individual contracts such as architects, engineers, chefs, yoga instructors, and musicians — will benefit from simplified visa procedures and more liberalised entry categories, making it easier for talent to work in the UK.
S C Ralhan, President of the Federation of Indian Export Organisations (FIEO), said, “This is a transformational moment for Indian exporters. The India–UK FTA opens unprecedented opportunities across key sectors, especially for MSMEs and labour-intensive industries. It not only reduces tariffs but also eases regulatory barriers for services and investments. This FTA will greatly boost India’s manufacturing and services exports, and attract UK investments into key growth sectors. Our exporters will now compete more effectively in a high-value market, and our service professionals will benefit from smoother mobility and reduced compliance hurdles.”
Advantage India
India has also secured an agreement in principle on the Double Contribution Convention. This will exempt Indian professionals and their employers from social security contributions in the UK for up to three years, enhancing the cost competitiveness of Indian talent.
The agreement has been designed to make trade more inclusive. Women and youth entrepreneurs, farmers, fishermen, startups, and MSMEs will gain new access to global value chains, supported by provisions that encourage innovation, promote sustainable practices, and reduce non-tariff barriers.
CETA is expected to significantly boost trade volumes in the coming years, creating jobs, expanding exports, and fostering a deeper, more resilient economic partnership between India and the United Kingdom.
Under the trade agreement, India has excluded several industrial products — such as diamonds, silver, smartphones, and optical fibers — from tariff concessions. Additionally, duty relief on imports of petrol and diesel vehicles will be limited to a fixed quota, while concessions for electric vehicles (EVs) will be capped at a few thousand units.
Conclusion
This FTA will serve as a catalyst for inclusive growth, benefiting farmers, artisans, workers, micro, small, and medium enterprises (MSMEs), start-ups, and innovators, while safeguarding India’s core interests and accelerating its journey towards becoming a global economic powerhouse.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
