India-UK FTA: How key sectors will benefit from tariff, policy shifts
New Delhi, Jul 24, 2025
The Comprehensive Economic and Trade Agreement (CETA) between India and the UK aims to double trade volume to over $100 billion by 2030
India and the United Kingdom signed a historic free trade agreement (FTA) on Thursday following years of negotiations. The FTA, officially called the Comprehensive Economic and Trade Agreement (CETA), aims to significantly boost bilateral trade and investment, with both countries targeting to double trade volume to over $100 billion by 2030 from the current $56 billion.
The signing of the agreement, which was approved by the Union Cabinet on Tuesday, took place at the UK Prime Minister’s official country residence, in the presence of Prime Minister Modi and British Prime Minister Keir Starmer.
Under CETA, India will gradually reduce import duties on key UK exports such as Scotch whisky, gin, and automobiles. In return, India will gain zero-duty access for its labour-intensive exports, including textiles, leather, and footwear—key sectors that are expected to benefit from enhanced market access in the UK.
Here are the key sector-wise changes to be expected under the India-UK FTA.
Indian services sectors:
The FTA eases mobility for Indian professionals, including Contractual Service Suppliers: Those working on specific projects for a UK client.
Independent Professionals: Skilled individuals like yoga instructors, classical musicians, and Chef de Cuisine will find it easier to offer their services in the UK.
Agriculture:
India to get duty-free access to several agricultural goods in the UK, including fruits, vegetables, cereals, turmeric, pepper, cardamom, and processed goods like ready-to-eat food, mango pulp, pickles, and pulses.
Over 95 per cent of agricultural and processed food tariff lines will attract zero duty.
Duty-free access is expected to increase agricultural exports by over 20 per cent in the next three years, contributing to India's goal of $100 billion agri-exports by 2030.
Provisions related to Technical Barriers to Trade (TBT) will streamline certification, cutting down time, and cost for exporters.
The FTA creates new market access for emerging products, including jackfruit, millets, and organic herbs, helping farmers diversify against domestic price volatility.
India's fisheries sector, especially in Andhra Pradesh, Odisha, Kerala, and Tamil Nadu, will see expansion through access to the UK's $5.4 billion marine import market.
India is not giving any tariff concessions on sensitive sectors — dairy products, apples and oats, and edible oils.
India exports worth $36.63 billion globally, while the UK imports $37.52 billion, but imports just $811 million from India, indicating a room for growth in high-value agricultural products.
States like Maharashtra (grapes, onions), Gujarat (groundnut, cotton), Punjab and Haryana (basmati rice), Kerala (spices), and NE states (horticulture) stand to benefit from the pact.
Marine:
The CETA eliminates UK tariffs on India's marine products. It will help improve the price realisation for Indian exporters, benefits that flow down to coastal fisherfolk through higher procurement rates.
Despite the UK's $5.4 billion marine import market, India's share remains at just 2.25 per cent.
With existing UK tariffs on Indian shrimp ranging between 4.2 per cent and 8.5 per cent, the FTA's tariff elimination is expected to unlock rapid growth, particularly in shrimp, tuna, fishmeal, and feeds.
Shrimp, tuna, fishmeal, and feeds, currently taxed between 4.2 per cent and 8.5 per cent, will become completely duty-free.
The FTA's Sanitary and Phytosanitary (SPS) measures help Indian exporters meet UK standards with ease, reducing rejections and strengthening trust.
Despite strong demand, India's current share in UK marine imports is only 2.25 per cent, leaving massive room for expansion.
Plantation sector:
The UK already represents a significant market for India, absorbing 1.7 per cent of coffee, 5.6 per cent of tea, and 2.9 per cent of spice exports, now primed for exponential growth with duty-free access to these products.
Duty-free access to instant coffee will help Indian businesses compete with other European suppliers of instant/value-added coffee, such as Germany, Spain, and the Netherlands.
FTA will create a powerful springboard for boosting exports of value-added coffee products, particularly Indian instant coffee, to the UK.
Textiles:
Zero-duty market access for the textiles and clothing sector accounts for 1,143 tariff lines (or product categories), contributing 11.7 per cent.
In textiles and clothing, while the UK's total imports ($26.95 billion) are lower than India's global exports ($36.71 billion), India still supplies products worth only $1.79 billion to the UK.
Sectors poised for exponential growth include RMG (ready-made garments), home textiles, carpets, and handicrafts, where the removal of duties creates immediate and substantial competitive advantages.
India is expected to gain at least 5 per cent additional market share in the UK within 1-2 years.
Engineering:
Number of goods to get zero-duty market access.
The UK is India's 6th largest engineering export market; it records strong trade momentum with growth of 11.7 per cent in 2024-25 over the previous year.
India's global exports are $77.79 billion, while the UK imports $193.52 billion worth of such products, yet only $4.28 billion comes from India, signalling strong potential for expansion.
With tariff elimination (as high as 18 per cent) under the FTA, engineering exports to the UK could nearly double in the next five years, reaching over $7.5 billion by 2029-30.
Healthy Growth Projections: Export of key engineering products like electric machinery, auto parts, industrial equipment, and construction machinery projected to grow at 12.20 per cent CAGR.
Pharma:
India exports $23.31 billion globally and the UK imports nearly $30 billion, but Indian pharma accounts for under $1 billion, indicating significant headroom for growth.
The zero tariff provisions under the FTA are expected to significantly enhance the competitiveness of Indian generics in the UK market, which remains India's largest pharmaceutical export destination in Europe.
A number of medical devices, including surgical instruments, diagnostic equipment, ECG machines, and X-Ray systems will not attract any duty.
This will reduce costs for Indian med-tech companies and make their products more competitive in the UK market.
Electronics and Software (ESC):
Zero-duty access is expected to accelerate exports of electronic products, with smartphones, optical fibre cables, and inverters set to strengthen India's foothold in the UK market.
Ambitious UK commitments for Software and IT-enabled Services to unlock new markets, drive job creation, and enhance export potential for Indian software firms; 15-20 per cent annual growth projected from current $32 billion in 2024-25.
Chemicals:
The FTA is anticipated to trigger a dramatic 30-40 per cent increase in India's chemical exports to the UK, propelling figures to an estimated $650-750 million in 2025-26.
In chemicals and allied products, India exports over $40.52 bn globally, against the UK's imports of $35.11 billion, but captures only $843 million of that market, highlighting a potential to scale up, especially with improved market access under the FTA.
Plastics:
Duty-free access presents an opportunity to tap into the UK's robust demand for plastics, films, sheets, pipes, packaging, tableware, and kitchenware, segments where India has proven manufacturing strength.
Duty-free access allows India to better compete with the UK's major import sources, such as Germany, China, the United States, the Netherlands, Belgium, and France.
Projected growth is 15 per cent, and the target for the next 5 years for the calendar year 2030 is $86.97 million.
Sports goods/toys:
Exports of soccer balls, cricket gear, rugby balls, and non-electronic toys are set to increase.
Indian sports goods and toys will benefit from eliminating UK import duties, making them more price-competitive compared to countries like China or Vietnam, which do not have similar FTAs with the UK.
Gems and Jewellery:
India's total G&J exports to the UK are valued at $941 million, with $400 million coming from jewellery. The FTA opens up a huge market as the UK imports approximately $3 billion worth of jewellery annually.
Tariff relaxations under the FTA are projected to double India's gems and Jewellery exports to the UK within the next 2-3 years.
Leather:
From 16 per cent to zero, tariffs eliminated on India's leather and footwear, empowering India's craftsmanship to walk tall worldwide.
The FTA is projected to add 5 per cent UK market share within 1-2 years. Exports are expected to exceed $900 million.
MSMEs in hubs like Agra, Kanpur, Kolhapur, and Chennai to benefit from tariff-free exports, GI protection, and simplified standards.
Others:
India stands to benefit from the duty elimination of tariffs on approximately 99 per cent of tariff lines, covering nearly 100 per cent of the trade value.
In key labour-intensive sectors, duties have been reduced to zero from previously up to 20 per cent on marine products, 12 per cent on textiles and clothing, 8 per cent on chemicals, and 10 per cent on base metals.
In the processed food sector, tariffs on 99.7 per cent of lines have been slashed from as high as 70 per cent to zero, offering a major boost for Indian exporters.
Innovation chapter (First of its kind):
Aims to support innovative processes and trade in innovative products.
Provisions for joint activities on emerging and transformative technologies, fostering a dynamic environment for learning and development.
Since 2014, India has signed five major FTAs, including with Mauritius, the UAE, Australia, EFTA (European Free Trade Association), and now the UK. Other FTA partners include ASEAN, Japan, Korea, and Singapore.
India is currently negotiating trade agreements with the EU, the US, Israel, Peru, and Oman. Talks with Canada remain on hold.
[The Business Standard]
