India-UK Comprehensive Economic and Trade Agreement (CETA)

The India-UK Comprehensive Economic and Trade Agreement, or CETA, is a free trade agreement between India and the United Kingdom. It removes or cuts import taxes on most goods traded between the two countries, and makes it easier to sell services and for professionals to work in each other's markets. It came into force on 15 July 2026. It is one of India's biggest trade deals with a developed economy.

Why does it matter?

The UK is the world's sixth-largest economy and a major buyer of goods like clothes, shoes, sea food, gems and machinery. Before CETA, Indian exporters paid UK duties of up to 12% on clothes, 16% on leather goods and 21.5% on marine products. Competing countries like Bangladesh already had duty-free access to the UK. CETA puts Indian exporters on an equal or better footing.

For the UK, which left the European Union in 2020 (Brexit), a deal with fast-growing India was a top goal of its new independent trade policy. The UK government estimates the deal will add about £25.5 billion a year to India-UK trade by 2040, and raise UK GDP (the total value of goods and services an economy produces) by about £4.8 billion a year in the long run. These are projections, not trade that has already happened.

Where did it come from?

• May 2021: India and the UK adopted the Roadmap 2030 and announced an Enhanced Trade Partnership, raising ties to a Comprehensive Strategic Partnership. They set a goal to double bilateral trade by 2030.
• January 2022: Formal FTA negotiations began.
• 14 rounds of talks followed over more than three years.
• 6 May 2025: Negotiations were concluded.
• 24 July 2025: The agreement was signed in London by the trade ministers of both countries.
• 9 October 2025: The two countries signed Terms of Reference (a document that sets out a body's job) making the JETCO the main body that oversees how CETA is put into practice.
• 10 February 2026: The companion Double Contribution Convention was signed.
• 15 July 2026: Both CETA and the Double Contribution Convention entered into force.
• 12 October 2026: At the 16th JETCO meeting, both countries agreed to share data every year on how businesses use CETA: how often firms claim its lower tariffs, and their feedback on what works. The first exchange is due one year after CETA came into force.

What does India get?

• Duty-free access for about 99% of India's tariff lines (product categories) exported to the UK, covering almost 100% of the value of India's exports.
• Removal of UK duties on key labour-intensive goods: textiles and clothing (up to 12%), leather and footwear (up to 16%), marine products (up to 21.5%), processed food (up to 70%), engineering goods and auto parts (up to 18%), and chemicals and pharmaceuticals (up to 8%). Gems and jewellery, toys and sports goods also benefit.
• Better access for services such as IT and IT-enabled services, finance, professional services, education and healthcare.
• Easier mobility of Indian professionals on short-term assignments.

What does the UK get?

• India cuts tariffs on about 90% of its tariff lines for UK goods, with about 85% becoming fully tariff-free within ten years.
• Duty on UK whisky and gin falls from 150% to 75% at once, and to 40% by the tenth year.
• Duty on UK cars falls from about 110% to 10%, but only for a limited number of cars each year (a quota).
• India gives no duty cut on UK electric, hybrid or hydrogen cars for the first five years. Small quotas for these cars open only from the sixth year. This protects India's young electric car industry.
• Better access for UK goods like medical devices, aerospace parts, cosmetics and chocolates.

What does India protect?

India kept sensitive products out of tariff cuts, including dairy products, cereals, millets, edible oils, oilseeds, apples and several vegetable products. This protects small farmers who could not compete with cheap imports.

The Double Contribution Convention (DCC)

When an Indian company sends an employee to work in the UK for a short time, both countries would normally make the worker and employer pay social security contributions (like pension payments). The worker pays twice but often never gets the UK benefit. The DCC, also called the Agreement on Social Security, exempts such temporary workers and their employers from paying in the UK for a fixed period.

The period was raised from three years to five years before the agreement came into force. More than 75,000 Indian professionals and over 900 companies are expected to benefit.

What CETA does not include

It does not have an investment protection chapter. A separate Bilateral Investment Treaty (BIT) is being negotiated.

Commonly confused concepts

• CETA vs CEPA vs FTA: All three are types of free trade agreements. The name changes, not the basic idea. CETA (UK) and CEPA (UAE, Oman) are broader than a simple goods-only FTA, as they also cover services and other areas.
• India-UK CETA vs India-EU FTA: The UK is no longer in the EU. The India-UK deal is separate from the India-EU FTA, whose talks were concluded in January 2026.
• India-UK CETA vs EU-Canada CETA: The EU and Canada also have an agreement called CETA (in provisional force since 2017). Same short name, different partners.
• Tariff lines vs trade value: "99% of tariff lines" means 99% of product categories. "Almost 100% of trade value" means nearly all of the money value of what India actually sells.
• Double Contribution Convention vs Double Taxation Avoidance Agreement (DTAA): The DCC stops paying social security twice. A DTAA stops paying income tax twice on the same income.

Issues, criticism and the way forward

• CBAM and carbon taxes: The UK is planning its own carbon border tax on goods like steel and aluminium from 2027. CETA does not exempt Indian goods from it, which may reduce gains for Indian metal exporters.
• Uneven use of FTAs: Indian exporters, especially MSMEs, often do not use FTA benefits because rules of origin and paperwork are complex. Awareness and support are needed. To track this, India and the UK agreed in October 2026 to share utilisation data every year (how often businesses actually claim CETA's lower tariffs).
• Limited mobility gains: Professional mobility is limited to temporary assignments; wider visa issues are outside the deal.
• Domestic competition: Cheaper UK whisky, cars and some manufactured goods may hurt some Indian makers, though quotas and phased cuts soften the impact.
• Way forward: Experts suggest helping MSMEs use the deal, quick completion of the investment treaty, and using the JETCO (Joint Economic and Trade Committee) to solve problems as they come up.

Concepts to Know

• Tariff line: A specific product category in a country's customs list, each with its own duty rate.
• Quota (tariff-rate quota): A fixed quantity of a good that can be imported at a low duty; anything above it pays the normal, higher duty.
• Social security contribution: Money deducted from a worker's salary (and paid by the employer) for pensions and similar benefits.
• Labour-intensive sector: An industry that uses many workers compared with machines, such as clothing, leather and jewellery.
• Brexit: The United Kingdom's exit from the European Union, completed in 2020.
• JETCO (Joint Economic and Trade Committee): A regular meeting led by the trade ministers of India and the UK. Since October 2025 it is the main body that checks how CETA is working and fixes problems.
• FTA utilisation (preference utilisation): The share of eligible trade where businesses actually claim the lower FTA tariff. A low rate means the deal exists on paper but firms are not using it.