India-UK Comprehensive Economic and Trade Agreement (CETA)

The India-UK Comprehensive Economic and Trade Agreement (CETA), signed in July 2025, is set to significantly impact India's economy and trade. This agreement, which requires ratification and domestic implementation steps, promises substantial tariff reductions mostly benefiting Indian exports, targeted sectoral growth opportunities, and the necessity of proactive domestic reforms to fully leverage trade gains and promote developmental goals.

One of the key aspects of the agreement is the elimination of tariffs on approximately 99% of Indian exports to the UK. This covers a wide range of goods, including textiles, leather, marine products, gems and jewellery, toys, chemicals, engineering products, and agricultural products, thus granting nearly duty-free market access to the UK. Conversely, India has opened around 89.5% of its tariff lines to UK goods, though with protections on sensitive sectors such as dairy, cereals, pulses, essential oils, and some high-technology and strategic products.

Sector-wise opportunities prominently include labour-intensive industries like textiles, leather, footwear, sports goods, toys, and gems and jewellery due to tariff elimination enhancing competitiveness in the UK market. Engineering goods, auto components, and organic chemicals are also growing sectors that are set to benefit from better market access. There is potential growth in manufacturing and clean energy, driven by improved trade facilitation and streamlined regulations.

The agreement's broad coverage spans multiple areas beyond trade in goods, including services, financial services, intellectual property rights, digital trade, labour, environment, and gender equality, reflecting a comprehensive approach to economic integration.

For India to maximize developmental benefits, domestic reforms will be crucial. These include strengthening Make in India and Production Linked Incentive (PLI) schemes, improving customs procedures and rules of origin compliance, enhancing services sector reforms, modernizing regulatory frameworks in sectors like digital trade and intellectual property, addressing labour and environmental standards, and easing professional mobility.

To curb "origin fraud" and secure Rules-of-Origin benefits, an Origin-Compliance Cell will deploy blockchain-based QR tags under DGFT. To incentivize man-made-fiber value chain investment, the Textile MMF Mission 2.0 will offer PLI-style sops, targeting winter-wear and athleisure for UK retail chains.

The CETA agreement sets a template for concessions that will influence EU and US negotiators. A ₹5,000-crore MSME Export-Readiness Fund is proposed to help small firms meet UK conformity-assessment and ESG norms. The IPR-Access Safeguard Clause will mobilize compulsory-license readiness under Patent Act §92A if voluntary licences delay affordable medicines.

CETA signals India's readiness to anchor alternative supply chains for critical inputs like electronics and green tech amid US-China trade frictions. Coastal SEZ Aquaclusters will be fast-tracked in Andhra and Odisha to exploit the zero-duty window for seafood processing. A Tariff-Revenue Buffer will ring-fence a portion of GST compensation cess to offset states' excise loss from liquor-tariff cuts.

In summary, the India-UK CETA delivers substantial tariff reductions mostly benefiting Indian exports, targeted sectoral growth opportunities, and necessitates proactive domestic reforms to fully leverage trade gains and promote developmental goals in India’s economy.

The India-UK Comprehensive Economic and Trade Agreement (CETA) will significantly impact India's mains, particularly in the textile, leather, footwear, sports goods, toys, gems and jewellery, engineering goods, auto components, and organic chemicals sectors, as tariff elimination enhances competitiveness in the UK market.
To capitalize on the CETA's benefits, it is crucial for India to implement domestic reforms, including improving customs procedures, enhancing services sector reforms, modernizing regulatory frameworks, addressing labour and environmental standards, easing professional mobility, and strengthening Make in India and Production Linked Incentive (PLI) schemes.
The India-UK CETA also extends into other areas beyond trade in goods, such as services, financial services, intellectual property rights, digital trade, labour, environment, and gender equality, demonstrating a comprehensive approach to economic integration, which may influence EU and US negotiators.