India-UK Trade Pact: What’s Covered and What’s Still On the Table?

NEW DELHI/LONDON – The India-UK Comprehensive Economic and Trade Agreement (CETA)—one of the most significant bilateral trade pacts of the decade—officially entered into force on July 15, 2026. Following years of complex negotiations that concluded in 2025, the deal aims to streamline market access, reduce tariffs, and strengthen economic ties between two of the world's largest economies.

The agreement, which is intended to increase bilateral trade from approximately $60 billion to $100 billion by 2030, grants duty-free access to nearly 99% of Indian exports to the UK and offers significant tariff concessions for UK exports to India. Despite this landmark achievement, analysts suggest the pact is not a "comprehensive" fix for all economic friction, leaving several sensitive areas as "unfinished business" in the long-term bilateral relationship.

The Scope of the New Agreement

The entry into force of CETA, accompanied by a reciprocal Double Contributions Convention (DCC), represents a major pivot in the economic partnership. The DCC specifically simplifies social security for professionals, allowing workers to avoid double taxation on social security contributions for up to five years—a long-standing request from the Indian professional services sector.

Key highlights of the agreement include:

• Tariff Liberalization: Immediate duty-free access for 99% of Indian exports to the UK and significant concessions for 89.5% of UK exports to India.

• Government Procurement: India’s first comprehensive government procurement chapter in an FTA, allowing UK firms to bid for Indian central government contracts.

• Professional Mobility: Simplified visa processes and mutual recognition agreements for qualifications in nursing, accountancy, and architecture.

Navigating the "Unfinished Business"

Despite these gains, the deal leaves several challenges unaddressed, reflecting the "familiar reality" of international trade negotiations where domestic political interests often override full market liberalization.

Protected Sectors

Several politically sensitive commodities—including rice, sugar, poultry, and certain dairy products—remain outside the primary liberalization framework. Both nations have opted to protect these domestic agricultural sectors from import competition, meaning true free trade in agriculture remains an elusive goal.

Non-Tariff Barriers

While CETA reduces tariffs, it does not automatically eliminate non-tariff hurdles. Indian exporters must still navigate complex "Rules of Origin" requirements to qualify for preferential treatment. Furthermore, structural challenges such as logistics costs, infrastructure constraints, and varying quality certification standards remain, which could limit the actual utilization of the new tariff concessions.

Steel and Services

The steel sector remains a point of uncertainty; despite the broader FTA, the UK has implemented stricter import regimes that could impact Indian steel exports. Additionally, while the deal improves access for IT and financial professionals, it stops short of providing the unrestricted labor mobility that India had initially sought.

Official Sources

Information regarding the agreement’s entry into force was confirmed by the UK Government's Business Growth Service and corroborated by the Government of India’s Ministry of Commerce and Industry.

Why It Matters

For businesses and investors, the CETA provides a new, legally binding framework that enhances certainty. However, the agreement is better understood as a "living" document rather than a final solution. Its ultimate success will depend on how both nations handle the implementation of sensitive sectors and whether they can harmonize non-tariff regulations in the years ahead.

Key Facts at a Glance

• Effective Date: July 15, 2026.

• Target Growth: Aiming for $100 billion in bilateral trade by 2030.

• Key Inclusion: India’s first comprehensive government procurement chapter in an FTA.

• Social Security: New Double Contributions Convention (DCC) exempts professionals from paying dual social security for up to five years.

FAQ

What happens to sectors not covered by the deal?

Sensitive sectors like agriculture (rice, sugar, poultry) remain under existing domestic protections and are excluded from the primary tariff liberalization framework.

Are all Indian goods now duty-free in the UK?

Nearly 99% of Indian exports to the UK receive zero-duty access, covering virtually the entire trade value.

Will it be easier for Indian professionals to work in the UK?

Yes, the agreement eases numerical restrictions and introduces mutual recognition for specific qualifications, though it does not guarantee "unrestricted" labor mobility.

Source: UK Government Business Growth Service, Law.asia, The Hindu