India-UK Trade Agreement
India-UK ‘Comprehensive Economic Partnership Agreement’ (CETA) is going to be officially implemented from 15 July 2026. This agreement, signed on July 25, 2025, will provide duty-free access to 99 percent of Indian exports in the UK market. At the same time, there will be huge relaxation in tariffs on many British products imported into India, which will affect their prices in the domestic market.
Historic cut in tariff for auto sector
For the first time, India has agreed to a major reduction in import duty on completely built (CBU) foreign passenger cars and trucks under a trade agreement. The 110 percent tax on British cars will be reduced to 10 percent in a phased manner. This relief will be applicable immediately on petrol and diesel cars. However, in order to protect domestic manufacturers, this exemption on electric (EV), hybrid and hydrogen cars will start from the sixth year. In return, Britain will also give preferential entry to Indian electric and hybrid cars in its market on priority basis.
Relief in import duty of premium foreign liquor
With the implementation of this agreement, import of premium foreign liquor in India will become cheaper. Import duty on liquor like Scotch whisky, bourbon, vodka, gin, rum and tequila is being reduced. In the first year, this fee will come down from 150 percent to 110 percent and by the 10th year it will be 75 percent. In the case of Scotch whiskey, this tax will reduce to just 40 percent within 10 years. However, the benefit of this tax exemption will be available only on those brands which fulfill the prescribed minimum price conditions.
New opportunities for Indian exporters and IT sector in Britain
India’s labour-intensive industries are expected to benefit hugely from this agreement. Many items like clothes, shoes, textiles, processed food, handicrafts and marine products can now be exported directly to the British market without any custom duty (which was earlier 4-16 percent).
Apart from this, the service sector and especially IT companies like TCS and Infosys have got big relief. Under the ‘Double Contribution Convention’, companies will not have to pay Social Security Contribution for five years for Indian employees who have gone to work temporarily in Britain. With this, now Indian companies will also be able to bid in 40,000 big contracts of the British government.
Doubt over safety of sensitive products and steel export
The agreement protects the domestic market by keeping sensitive Indian products like apples, walnuts, gold bars and smartphones out of tax exemption. India has rejected the demand to extend the patent period, so that the right to make cheap medicines in emergency situations is protected.
