NEW DELHI — India and the United Kingdom formally activated their Comprehensive Economic and Trade Agreement (CETA) at midnight today, launching a new phase in bilateral trade that both governments say will boost annual economic output by £28 billion ($35 billion) by 2035. The deal, years in the making, eliminates or reduces tariffs on more than 90% of traded goods, eases regulatory barriers, and introduces new rules for digital trade, intellectual property, and professional mobility.
What Happened
The Ministry of Commerce and Industry confirmed that the agreement entered into force on schedule, following ratification by both parliaments. Under the terms, India will phase out or lower tariffs on 92% of UK exports, including automobiles, machinery, and Scotch whisky. In return, the UK will cut duties on Indian textiles, leather goods, and select agricultural products. Both sides have also agreed to streamline visa processes for skilled professionals, addressing a long-standing demand from India’s services sector.
Indian Commerce Minister Piyush Goyal called the pact a “historic milestone,” stating it would “foster innovation, create jobs, and strengthen economic resilience.” UK Trade Secretary Kemi Badenoch described the deal as a “win-win,” emphasizing its potential to deepen ties in technology, defense, and green energy.
Why It Matters
The agreement arrives as both nations seek to diversify trade partnerships amid shifting global supply chains. For India, the deal reduces reliance on traditional markets like China and the U.S., while the UK, post-Brexit, gains a foothold in one of the world’s fastest-growing economies. Bilateral trade reached $20.3 billion in 2025, and officials project the CETA could nearly double that figure within a decade.
The pact also includes provisions on digital trade and sustainable development, aligning with both countries’ climate commitments. However, its impact will depend on how quickly businesses adapt to the new tariff regime and whether regulatory easing translates into tangible market access.
Background and Context
Negotiations for the India-UK CETA began in 2022, following the UK’s exit from the European Union. The deal builds on the 2021 Enhanced Trade Partnership, which set a target of doubling bilateral trade by 2030. Key sticking points included India’s demand for easier visa rules for professionals and the UK’s push for greater access to India’s agricultural and automotive markets.
The agreement’s entry into force comes as India pursues similar pacts with the European Union and Australia, signaling a broader push to expand trade beyond its traditional partners. For the UK, the deal is part of a post-Brexit strategy to secure trade agreements with high-growth economies.
Competing Claims and Uncertainty
While both governments have hailed the CETA as a breakthrough, industry groups have raised concerns. Indian textile manufacturers warn of increased competition from UK imports, while British farmers fear cheaper Indian agricultural products could undercut domestic producers. Labor unions in both countries have also questioned whether the deal will create enough high-quality jobs to offset potential disruptions in sensitive sectors.
Another point of contention is the agreement’s digital trade chapter, which some critics argue lacks robust safeguards for data privacy. The UK government has dismissed these concerns, stating that the deal includes “strong protections” for personal data while promoting cross-border data flows.
What to Watch Next
The immediate focus will be on implementation. Businesses on both sides will need to navigate new customs procedures and regulatory frameworks, with early adopters likely to gain a competitive edge. The first review of the agreement’s impact is expected within 12 months, with a full assessment scheduled for 2028.
Longer-term, the success of the CETA could influence India’s ongoing trade talks with the EU and the Gulf Cooperation Council. For the UK, the deal sets a precedent for future agreements with other emerging markets, including Indonesia and Brazil.
Conclusion
The India-UK CETA marks a significant step in reshaping economic ties between the two nations. While its long-term benefits are projected to be substantial, short-term challenges—particularly in labor-intensive sectors—could test its resilience. As businesses begin to leverage the new tariff cuts and regulatory easing, the pact’s true impact will become clearer in the coming years.
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