India-UK trade pact takes effect, cutting tariffs and boosting services trade

A new trade pact between India and Britain officially came into effect on Wednesday, aiming to slash tariffs on thousands of goods and expand market access for services, firms, and professionals in both nations. The Comprehensive Economic and Trade Agreement grants Indian exporters duty-free access to the majority of British tariff lines.

This move is expected to significantly benefit Indian industries such as textiles, leather, footwear, marine products, gems, and jewellery, as well as processed foods. Meanwhile, Britain anticipates gaining greater access to India's rapidly expanding economy through phased tariff reductions and quotas in sectors including automobiles and silver. Openings are also expected in procurement, financial services, education, insurance, and professional services.

Prime Minister Narendra Modi stated the trade pact and an accompanying social security agreement would deepen economic ties and provide "fresh momentum" to India's farmers, entrepreneurs, and small businesses. In the 2025-26 fiscal year, India exported $13.44 billion worth of goods to Britain and imported $11.68 billion. Bilateral services trade reached $35.44 billion in 2024, with India holding a services surplus of nearly $7.9 billion.

Britain will immediately eliminate duties on 96.8 percent of its tariff lines, covering 97.7 percent of trade value. India will remove duties on 64.1 percent of tariff lines at once, with gradual phase-outs planned for an additional 21 percent, while sensitive products remain excluded. Indian officials foresee substantial gains in sectors where British tariffs previously ranged from 4 to 20 percent. The agreement also eases temporary entry rules for business visitors, transferees, investors, service suppliers, and independent professionals, and includes a convention to exempt eligible Indian professionals and employers from paying into Britain's National Insurance system for stays up to five years.

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The trade pact and accompanying social security agreement would deepen economic ties and give “fresh momentum” to India’s farmers, entrepreneurs and small businesses.