India, UK FTA may come into force in next 30 to 45 days, says Piyush Goyal
Commerce Minister Piyush Goyal announced that the India-UK Comprehensive Economic and Trade Agreement (CETA), signed on July 24, 2025, is likely to come into force within 30 to 45 days — placing the implementation around mid-May 2026.
The UK Parliament ratified the deal at record speed, faster than any previous trade agreement, which Goyal described as reflecting the strength of bilateral ties.
Under the agreement, 99% of Indian exports will enter the UK at zero duty, while India will reduce tariffs on over 80% of UK tariff lines over a 10-year schedule.
Goyal also noted India is simultaneously pursuing Free Trade Agreements with Oman, Mercosur (South America), Canada, Chile, Peru, and the Southern African Customs Union (SACU).
The deal is expected to nearly double bilateral trade to USD 120 billion by 2030, up from roughly USD 60 billion currently.
India secured a USD 18 billion services surplus in bilateral trade, with strong commitments from the UK covering 12 major service sectors and 137 sub-sectors.
Free Trade Agreements: Structure and Types
A Free Trade Agreement (FTA) is a treaty between two or more countries to reduce or eliminate trade barriers — tariffs, quotas, and non-tariff barriers — on goods and services. FTAs can be bilateral (two countries) or plurilateral (multiple countries). A Comprehensive Economic Partnership Agreement (CEPA) or Comprehensive Economic and Trade Agreement (CETA) is a broader variant that covers goods, services, investment, and intellectual property. India has previously signed CEPAs with the UAE, South Korea, Japan, and ASEAN. The India-UK CETA is India's most comprehensive trade agreement with a G7 nation.
Key Details
- Most-Favoured-Nation (MFN) clause: ensures the best tariff rate offered to any country is automatically extended to all WTO members
- Rules of Origin: specify how much of a product must originate in the exporting country to qualify for preferential duty rates
- Negative list: sectors excluded from liberalisation (e.g., India typically protects agriculture and dairy)
- India's previous FTA with UAE (CEPA, signed 2022) was implemented in record 88 days
The India-UK CETA's fast-track parliamentary approval and 30-45 day implementation timeline mirrors the expedited model of the India-UAE CEPA, signalling India's growing efficiency in trade deal execution.
Trade in Services: India's Comparative Advantage
India runs a significant services trade surplus with most developed economies. Key service exports include IT/ITeS, business process outsourcing, financial services, healthcare, and professional services (accounting, engineering, legal). The India-UK deal covers all 12 major service sectors under the WTO's General Agreement on Trade in Services (GATS) framework, including Mode 4 (movement of natural persons) — critical for Indian IT professionals and students in the UK.
Key Details
- India's services exports to the UK exceed USD 18 billion annually
- Mode 1: Cross-border supply (e.g., Indian IT firms serving UK clients remotely)
- Mode 4: Movement of natural persons (e.g., Indian professionals working temporarily in the UK)
- The deal provides enhanced visa/work permit facilitation for Indian professionals
The USD 18 billion services surplus is a direct outcome of Mode 1 and Mode 4 liberalisation in the CETA, giving Indian IT and services firms legally guaranteed market access in the UK.
India's FTA Strategy: Diversification and De-risking
India's FTA push — with UK, Oman, Mercosur, Canada, Chile, Peru, and SACU — reflects a strategic pivot toward diversifying trade partnerships beyond China-dependent value chains and reducing over-reliance on any single market. This aligns with the broader "China+1" manufacturing strategy and India's goal of becoming a global manufacturing hub under schemes like PLI (Production Linked Incentive).
Key Details
- India's merchandise exports in FY25: ~USD 437 billion; target is USD 1 trillion by 2030
- Mercosur (Brazil, Argentina, Uruguay, Paraguay) represents a combined GDP of ~USD 2.5 trillion
- India-Canada FTA (CECA) talks have been stalled since 2013 and resumed in 2022; still ongoing
- SACU (South Africa, Botswana, Lesotho, Namibia, Eswatini) — India's FTA would open sub-Saharan Africa access
The concurrent pursuit of multiple FTAs signals that India is executing a coordinated trade diplomacy strategy rather than ad-hoc bilateral deals, with the UK CETA as a flagship template.
- Agreement signed: July 24, 2025 (after 14 rounds of negotiations beginning 2022)
- Implementation timeline: ~30-45 days from April 2026 (mid-May 2026)
- UK tariff elimination: 100% of tariff lines over 7 years; covers 99.6% of Indian exports by value
- India tariff reduction: Over 80% of UK tariff lines over 10 years
- Whisky/gin: UK tariff drops from 150% to 75% initially, reaching 40% in 10 years
- Automotive: UK cars face 10% tariff under a quota system (down from current rates)
- Bilateral trade target: USD 120 billion by 2030 (current ~USD 60 billion)
- Services surplus: India enjoys USD 18 billion surplus with UK
- Other FTAs being pursued: Oman, Mercosur, Canada, Chile, Peru, SACU