India-UK Free Trade Agreement Comes Into Force
The Comprehensive Economic and Trade Agreement makes nearly all Indian exports duty-free in Britain and phases down India's car import duties.
The India-United Kingdom Comprehensive Economic and Trade Agreement (CETA) came into force on 15 July 2026, opening one of the most far-reaching trade relationships either country has signed. The pact removes duties on the overwhelming majority of goods traded between the two economies and eases access for services and professionals.
India's commerce ministry described it as the country's most ambitious and aspirational free trade agreement to date.
Key Highlights
- The UK removes tariffs on about 99% of Indian export value, most of it immediately.
- India cuts duties on roughly 90% of product lines, phased over several years.
- Labour-intensive Indian exports — textiles, footwear, processed food — enter Britain duty-free.
- Import duty on UK-built cars falls from 110% to 10%, phased and within quotas.
- Domestic EV makers get a five-year protection window before UK EV concessions begin.
What the UK Opened
According to India's commerce ministry, cited by Business Today, Britain has offered tariff liberalisation on 98.8% of its tariff lines, covering 99.5% of the value of Indian exports; 97.7% of that trade value becomes duty-free immediately, while about 0.5% is excluded. The Hindu reported the UK would remove tariffs on 96.8% of its tariff lines from day one.
Labour-intensive sectors are the clearest winners. Garments, textiles, footwear, carpets, cereals, vegetables, fruit, spices, fish, meat and processed foods — which previously faced UK duties of 4% to 16% — now enter tariff-free, according to Financial Express and The Hindu BusinessLine.
Tariff changes at a glance
| Area | Change |
|---|---|
| UK tariffs on Indian goods | ~99% of export value duty-free (97.7% immediately) |
| Indian labour-intensive exports | Textiles, footwear, food: 4-16% duty to zero |
| UK passenger cars into India | 110% to 10%, phased, within quota |
| UK trucks into India | 44% to 8.8% within quota by year 5 |
| Indian EVs into UK | Duty-free within quota vs standard 10% |
Autos: A First for India
For the first time in any FTA, India agreed to sharply cut duties on fully built imported vehicles. ETAuto reported that duties on UK-made passenger cars will fall from 110% to 10% in phases, with petrol and diesel models getting concessions from the start and electric, hybrid and hydrogen cars becoming eligible only from the sixth year — a five-year protection window for domestic EV manufacturers.
India will allow 3.78 lakh conventional-engine cars at concessional duty over the first 15 years. Truck duties fall from 44% to 8.8% within a quota rising from 2,500 to 3,500 units by the fifth year. Indian electric and hybrid makers, in turn, gain duty-free access to the UK within an annual quota — a 10-percentage-point advantage over the standard British tariff.
Services and Professionals
Beyond goods, the agreement improves access for Indian services companies and makes it easier for professionals to work in the UK, according to Business Standard. Services, particularly IT and professional work, are among India's strongest exports to Britain.
Why It Matters
The CETA is India's most significant trade pact with a major Western economy and follows its wider push to expand market access, seen also in the India-EU trade agreement. For exporters in textile and leather hubs, duty-free entry to a high-value consumer market could lift orders; for Indian consumers, phased auto liberalisation may eventually ease prices on some imported vehicles.
Frequently Asked Questions
When did the India-UK FTA take effect?
The Comprehensive Economic and Trade Agreement came into force on 15 July 2026.
What share of Indian exports becomes duty-free?
The UK removes tariffs on roughly 99% of Indian export value, most of it immediately.
What gets cheaper for Indian exporters?
Textiles, footwear, carpets and processed food, which faced 4-16% UK duties, now enter duty-free.
How are cars affected?
India cuts duties on UK-built cars from 110% to 10% in phases within quotas, while protecting domestic EV makers for five years.
Does it cover services?
Yes. It improves access for Indian services firms and eases work mobility for professionals in the UK.