India-UK Free Trade Agreement Comes Into Effect Today: Whisky, Luxury Cars, Fashion to Get Cheaper; Indian Exports Receive Zero-Tariff Access

India and the United Kingdom's landmark Comprehensive Economic and Trade Agreement (CETA) officially came into force on Wednesday, marking one of India's most significant bilateral trade deals in recent years. The agreement is expected to reduce prices of several imported British products in India while providing Indian exporters duty-free access to almost the entire UK market.

Under the agreement, 99% of Indian goods will now enter the UK without import duties, while India will gradually reduce tariffs on 99% of British products, bringing the average import tariff down from around 15% to nearly 3%. Policymakers from both countries believe the pact could help double bilateral trade to nearly USD 120 billion by 2030.

The agreement was signed on July 24, 2025, after nearly three-and-a-half years of negotiations involving 14 formal rounds. Commerce and Industry Minister Piyush Goyal and UK Secretary of State for Business and Trade Jonathan Reynolds signed the pact in the presence of Prime Minister Narendra Modi and UK Prime Minister Keir Starmer.

British Products to Become More Affordable

Consumers are expected to see a phased reduction in prices of several premium British products.

Import duty on Scotch whisky and gin has been reduced from 150% to 75%, with a further reduction to 40% planned over the next decade. Industry estimates suggest premium Scotch whisky could become substantially more affordable as tariff reductions are implemented.

Luxury automobiles from brands such as Jaguar Land Rover and Rolls-Royce will also benefit from sharply reduced duties under a quota-based system, potentially lowering retail prices by 20–30%.

The agreement also cuts tariffs on products including salmon, lamb, chocolates, biscuits, soft drinks, cosmetics, medical devices, aerospace components, branded clothing, furniture and selected electronics, making many imported British goods more competitively priced in India over time.

Export-Oriented Industries Set to Gain

The FTA is expected to provide a major boost to India's export-driven sectors.

Indian textiles and apparel, which previously attracted import duties of 8–12% in the UK, will now enjoy duty-free access, improving competitiveness against exporters from Bangladesh and Vietnam. Manufacturing hubs such as Tiruppur, Surat and Ludhiana are expected to benefit from increased export demand.

The agreement also removes tariffs on Indian jewellery, leather goods, engineering products, machinery, auto components, marine products, tea, spices, basmati rice, chemicals and speciality materials, creating fresh opportunities for exporters.

Indian pharmaceutical companies are expected to benefit from simplified registration procedures for generic medicines, allowing faster entry into the UK's healthcare market.

MSMEs and Green Investment

Officials believe the agreement will strengthen India's Micro, Small and Medium Enterprises (MSMEs), which contribute nearly 40% of the country's exports. Easier market access is expected to improve margins and expand business opportunities for smaller exporters.

The agreement also encourages greater British investment in information technology, financial services, renewable energy, green hydrogen, electric vehicles and clean technology, supporting India's manufacturing ambitions and energy transition goals.

Sensitive Sectors Protected

While the agreement significantly liberalises trade, India has kept several sensitive sectors outside the tariff reduction framework.

Products including dairy items, apples, cheese, oats, selected edible oils, along with certain industrial products such as specific plastics, diamonds, silver, smartphones, optical fibre products and telecom equipment, remain protected under the agreement.

Strategic Trade Partnership

Trade experts describe the India-UK agreement as part of New Delhi's broader strategy to strengthen economic partnerships with major global economies. Following agreements with Australia, the UAE and the European Free Trade Association (EFTA), India is now actively pursuing comprehensive trade deals with the European Union and the United States.

Government officials expect the agreement to increase exports, attract investment, strengthen supply chains and create employment across manufacturing and labour-intensive industries over the coming decade.