India-UK CETA to boost bilateral trade to $100 billion by 2030; engineering, textiles among biggest gainers

New Delhi: India's Comprehensive Economic and Trade Agreement (Ceta) with the UK, which takes effect on Wednesday, is expected to propel bilateral trade to $100 billion by 2030, opening significant opportunities for exporters across engineering goods, textiles and apparel, leather, gems and jewellery, chemicals, marine products and services, the Union commerce ministry said.

Describing it as one of India's most ambitious trade pacts, commerce secretary Rajesh Agrawal said the Ceta sets a "gold standard" owing to its broad sectoral coverage and deep commitments on tariff as well as non-tariff measures. Unlike conventional free trade agreements that primarily focus on tariff liberalization, the India-UK Ceta spans 30 chapters, covering areas such as digital trade, government procurement, innovation, labour, environment and gender, while maintaining safeguards for India's sensitive sectors.

Under the agreement, Indian exporters will receive duty-free access for 99.5% of the value of India's exports to the UK, covering 98.8% of tariff lines, effectively eliminating duties across a wide range of labour-intensive and manufacturing sectors. India, in turn, has offered preferential market access covering 89.4% of the value of UK exports, with tariff reductions being phased in for sensitive products. The agreement is expected to substantially improve the competitiveness of Indian exports in one of the world's largest developed markets.

Deeper economic engagement

The commerce ministry expects the agreement to significantly deepen economic engagement between the world's fifth and sixth-largest economies. Merchandise trade between India and the UK stood at $25.12 billion in 2025-26, with India's exports at $13.44 billion and imports at $11.68 billion. Bilateral services trade was valued at $35.44 billion in 2024, with India maintaining a services trade surplus of $7.88 billion.

Engineering is expected to be one of the biggest beneficiaries of the agreement. The UK imports engineering goods worth nearly $193.5 billion annually, while India's exports to the market currently stand at about $4.28 billion, highlighting significant untapped potential. Duty elimination is expected to boost exports of automobiles, auto components, motorcycles, industrial machinery, iron and steel products, aluminium products and engineering equipment while strengthening participation of Indian manufacturers and MSMEs in global value chains. Manufacturing hubs across Tamil Nadu, Maharashtra, Gujarat, Karnataka, Uttar Pradesh and Telangana are expected to benefit.

The textiles and clothing sector is also poised for a major boost. The agreement removes UK tariffs of up to 12% across 1,143 tariff lines, enhancing India's competitiveness against Bangladesh, China, Pakistan, Vietnam, Cambodia and Türkiye. The UK imports textiles and apparel worth around $28.8 billion annually, while India's exports remain relatively modest, leaving substantial room for expansion. Export-oriented clusters in Tiruppur, Surat, Ludhiana, Panipat, Bhadohi and Moradabad are expected to benefit.

The agreement also provides immediate duty-free access for leather and footwear, gems and jewellery, chemicals, plastics, rubber products, electrical machinery, marine products and several agricultural exports. Leather and footwear exporters will benefit from the removal of tariffs of up to 16%, while marine exporters will gain from complete duty elimination in a UK seafood market valued at nearly $4.9 billion. The gems and jewellery industry will similarly benefit from the removal of duties of up to 4%, improving India's competitiveness in the UK's premium retail market.

Agriculture and processed food exporters are expected to gain wider market access as the UK eliminates tariffs on virtually all agricultural products, barring a limited number of sensitive items. The agreement provides duty-free access on 97.3% of processed food tariff lines, benefiting exports of fresh fruits and vegetables, cereals, bakery products, processed foods, natural honey and value-added food products. The commerce ministry estimates Indian exporters will gain improved access to the UK's agriculture and processed food market valued at over $90 billion.

Beyond merchandise trade, the Ceta delivers India's most comprehensive market access in services under any UK trade agreement. The UK has committed market access across 137 services sub-sectors, including information technology, financial services, professional services, telecommunications, education and business services. It also eases mobility for business visitors, intra-corporate transferees, contractual service suppliers, investors and independent professionals while supporting mutual recognition of professional qualifications.

Game changer for services

A key feature accompanying the agreement is the Double Contribution Convention (DCC), which commerce secretary Agrawal described as a "game changer" for India's services sector. The arrangement exempts eligible Indian professionals on temporary assignments in the UK for up to five years from making National Insurance contributions there while continuing to contribute to India's social security system. According to the commerce ministry, the measure is expected to benefit more than 75,000 Indian professionals and around 900 employers, resulting in annual savings of over $600 million.

The agreement also opens access for Indian businesses to the UK's government procurement market, estimated at around £90 billion ($122 billion), while preserving policy space for sensitive sectors such as dairy, rice, sugar and automobiles through calibrated tariff schedules and exclusions.

Industry experts said the agreement would enhance India's export competitiveness by reducing trade costs and improving regulatory certainty.

"As the India-UK FTA comes into effect, businesses on both sides stand to benefit from improved market access, lower trade costs and greater certainty across goods and services trade," said Agneshwar Sen, trade policy leader at EY India.

Sen said sectors including textiles and apparel, leather and footwear, gems and jewellery, engineering goods, auto components, chemicals, agriculture, marine products, and IT, financial and professional services are expected to benefit the most. He added that the agreement is among India's first major trade pacts with a developed economy to become operational in recent years and would help Indian businesses become more familiar with advanced regulatory standards, compliance requirements and trade facilitation processes.

"However, the realization of these benefits will depend on effective implementation, adherence to rules of origin requirements and the ability of businesses to align their supply chains and compliance frameworks," Sen said, adding that the agreement also reflects India's increasingly proactive trade strategy and its ambition to deepen integration into global value chains.

Agrawal said the government's immediate focus would now shift from negotiations to implementation to ensure Indian exporters begin availing the agreement's benefits from day one. He said the pact is designed to create opportunities across the economy—from farmers, fishermen and workers to MSMEs, women entrepreneurs and startups—while strengthening India's integration with global value chains and expanding its presence in one of the world's most important developed markets.