What does the new U.K.-India trade deal entail? | Explained

The story so far:India and the UK announced in May this year after the negotiations related to the agreement were concluded, after a comprehensive economic and trade agreement (CETA) on Thursday. With the negotiations that started in January 2022, the agreement has been making an effort for more than three years to increase bilateral trade between the two countries.

What was accepted in general?

In accordance with the agreement, England removed tariffs in 99% of the product series. However, all of these product series is not exported to the UK by India, according to an analysis of the Global Trade Research Initiative, textile, shoes, automobiles, seafood and fresh fruits such as 6.5 billion dollars or 45% of what they have exported to India to England at the moment will now enter the UK back to the UK. India’s $ 8 billion of goods – oil, pharmaceuticals, diamonds and aircraft components exported to England – already enjoying zero mission access. According to the British government data, India agreed to eliminate or reduce tasks in 90% of the tariff lines that make up about 92% of the UK’s exports to us. Alcohol from the UK will be cheaper in India, especially whiskey, British cars and engineering products.

England is a relatively small trade partner for India. Approximately 3.3% of India’s exports in 2024-25 went to England and England made up 1.2% of India’s imports that year.

Is the agreement limited to goods trade?

No, CETA contains an important section of the services that attract India, especially since service exports are a vital growth engine. Under the ‘economic’ component of the agreement, India agreed to open some key sectors of the service economy to UK companies such as accounting, audit, financial services, telecom and environmental services.

This means that UK companies operating in these sectors can offer their services to Indian customers without having to establish a local assets here. However, they will be treated with Indian companies equally. India also agreed to recognize Britain’s professional qualities in law and accounting, but not in legal services.

The UK agreed to give commercial assets rights to Indian companies in sectors such as computer services, consultancy and environmental services. This means that Indian companies operating in these sectors can establish branches, subsidiaries or representative offices in the UK.

One of the great positive ones for India emerges from the Double Contribution Agreement (DCC), a parallel agreement between the two countries negotiated at the same time and will enter into force while making ceta. In accordance with the DCC, the UK will allow 75,000 Indian workers to continue to pay the social security system without having to pay the same in the UK, and it is very useful to contribute to the benefits of the Social Group while many of them work there for a short time.

Does the agreement contain standard or unusual aspects?

Although there are wide contours of the agreement, there are some unusual aspects, although it is quite standard interested in tariff and non -tariff obstacles. The first is about automatic tariffs. For the first time, India contained interruptions on its tariffs on imported cars in a trade agreement.

Large -engine luxury gasoline cars imported from England to India will see that import tasks have dropped from maximum 110% to 10% for 15 years. However, this is subject to a quota that started from 10,000 units in the fifth year of the agreement and rose to 19,000. For medium -sized cars, the tariff was cut up to 50%, subject to a quota that would drop to 10% up to the fifth year.

Small cars will reduce a similar tariff and enjoy the growing quota.

According to government sources, the idea behind the quota is to provide enough time to prepare to compete with the imports of the domestic industry. In addition, newly emerged industries such as electric vehicles are protected for the first five years without any task concessions for electrical, hybrid and hydrogen -operating vehicles.

Another unusual aspect of the agreement is that British companies will now be allowed to participate in Indian central government supply proposals. India, transportation, green energy and infrastructure sectors such as central ministries and departments will open approximately 40,000 high -valuable contract.

So what’s next?

The agreement does not come into force immediately. Both countries need to be approved by the cabinets, which can last from six months to one year. The agreement for India serves as a template for future agreements with other economies such as the US and the EU, both in various stages of the negotiation.

Published – 27 July 2025 05:00 IST