The story so far: India and Great Britain signed a comprehensive economic and business agreement (CETA) on Thursday after announced the conclusion of negotiations on the Agreement this year. In the negotiations starting in January 2022, the agreement is more than three years of effort to strengthen the bilateral trade between the two countries.
What was generally agreed to?
Under the United Kingdom agreement, tariffs removed 99% of their product lines. However, not all these product lines are balanced to the UK according to the analysis of the Global Trade Research Initiative, about $ 6.5 billion or 45% of what India currently exports to the UK-like are textiles, shoes, leather, cars, seafood and fresh fruits such as grapes and mangoes Britain. The remaining $ 8 billion goods that India exports to the UK – oil, drugs, diamonds and aircraft components – already have access to zero duty. India agreed to exclude or reduce duties to 90% of its customs lines, which, according to data from the United Kingdom, includes about 92% of what the United Kingdom exports to us. Alcohol from the UK, especially whiskey, should be cheaper in India, as well as British cars and technical products.
Great Britain is a relatively small business partner for India. About 3.3% of Indian exports in 2024-25 went to Great Britain and the United Kingdom this year accounted for 1.2% of Indian imports.
Is the agreement limited to the goods trade?
No, CETA includes a significant part of services that is particularly interesting for India, because the export of services is a vital engine of growth. Within the “economic” component of the agreement, India agreed to opened some key sectors of its economics to British companies such as accounting, audit, financial services, telecommunications and environmental services.
This means that British companies operating in these sectors can offer their services to Indian customers without having to create a local presence first. Yet they will be treated at the same level as Indian companies. India also agreed to recognize British professional qualifications in the field of law and accounting, but not in legal services.
The United Kingdom agreed to grant rights to the commercial presence of Indian companies in sectors such as computer services, counseling and environmental services. This means that Indian companies operating in these sectors can set up branches, subsidiaries or representative offices in the UK
One main positive for India is based on the DC (DCC) convention, a parallel agreement between two countries that have been negotiated at the same time, and this will come into effect when a ceta does. Within the DCC, the United Kingdom enables 75,000 Indian workers at the United Kingdom’s short authorities to continue paying the Indian Social Security system without having to pay the same in the UK, it is highly beneficial for Indian workers in the UK, because many of them work there so short that they do not receive social security benefits.
Is the agreement standard or does it include unusual aspects?
While wide contours of the agreement are quite standard, they deal with tariff and non-tariff barriers, there are some aspects that are unusual. The first is to do with car tariffs. For the first time, India included cuts into its tariffs on imported cars in a business agreement.
Luxury gasoline cars with a large engine imported to India from the UK will reduce their import duty to 10% in 15 years of the current maximum 110%. However, this is subject to a quota starting at 10,000 units and in the fifth year of the agreement increases to 19,000. In medium -sized cars, the tariff has been reduced to 50% subject to quota, which will drop to 10% within five years.
Small cars will enjoy a similar reduction in tariffs and growing quotas.
The idea of quota according to government sources is to allow the domestic industry enough time to prepare for the competition of imports in the UK. Furthermore, nascent industries such as electric vehicles were further protected without any concessions for electric, hybrid and hydrogen vehicles for the first five years.
Another unusual aspect of the agreement is that British companies will now be able to participate in the bids of the Indian Central Government. India will start about 40,000 high -value contracts from central ministries and industries, such as transport, green energy and infrastructure.
What to do next?
The agreement will come into force immediately. It is necessary to ratify the parliaments of both countries, which is a process that could last for six months to a year. For India, the agreement also serves as a template for future agreements with other economies such as the US and the EU, which are at different stages of negotiations.
Published – 27 July 2025 05:00
