India-UK Comprehensive Economic and Trade Agreement (CETA)
Introduction
The India-United Kingdom (UK) Free Trade Agreement (FTA), signed on July 24, 2025, during Prime Minister Mr. Narendra Modi’s official visit to London, marked the culmination of 14 rounds of negotiations since 2022. The agreement aims to double bilateral trade to US$ 120 billion by 2030 by eliminating tariffs on 90% to 99% of goods and liberalising key services sectors, making it India’s most comprehensive trade pact with a G-7 nation. The key highlights of the FTA are as follows:
Market Access for Goods: Tariff Elimination and Sectoral Liberalization
India and the UK have agreed to progressively eliminate or reduce tariffs on more than 11,500 product lines.
- The UK will eliminate customs duties on 100% of its tariff lines over a seven-year period, covering 99.6% of Indian exports by value
- India will provide tariff elimination or reduction for more than 80% of UK tariff lines over a 10-year schedule, representing approximately 70% of its imports from the UK.
Key sectoral highlights include:
- Indian textiles and apparel exports, previously facing duties between 10–12% in the UK, will now receive duty-free access, potentially increasing exports by US$ 1.35 billion annually.
- Indian pharmaceutical firms will benefit from fast-track market access in the UK, with mutual recognition of Good Manufacturing Practices and reduced inspection duplication.
- Tariffs on Indian gems and jewellery will be eliminated, improving competitiveness in a segment currently exporting over US$ 1.63 billion to the UK each year.
- India will reduce its current 150% tariff on Scotch whisky to 75% over 3 years, with further reduction to 30% under a quota of 2 million litres annually.
- For UK automobiles, India will lower tariffs from 100% to 50% for up to 10,000 units annually, covering high-end electric and hybrid vehicles.
Rules of Origin: Ensuring Local Value Addition
The FTA includes strict rules of origin to ensure only domestically produced or substantially transformed goods benefit from tariff concessions.
- Most manufactured goods must meet a minimum of 40–45% Regional Value Content (RVC).
- Goods must undergo a substantial transformation, often demonstrated through a change in tariff subheading (CTSH), to qualify for preferential treatment.
- Inputs from either India or the UK can be counted toward origin requirements under cumulative rules.
- Exporters can self-certify origin but must retain documentation for five years to support post-import audits or customs verification.
Customs and Border Efficiency
To improve trade efficiency, the agreement mandates modernization and digitization of customs procedures.
- Customs authorities must issue advance rulings on origin, classification, and valuation within 150 days of application.
- Clearance of perishable goods must be completed within six hours, while most other consignments are to be processed within 24–48 hours.
- Both parties commit to enabling full electronic documentation and establishing single-window clearance platforms.
- Trusted traders enrolled in Authorized Economic Operator (AEO) programs will receive expedited clearance and fewer inspections.
Agricultural and Food Standards (SPS)
The agreement harmonizes Sanitary and Phytosanitary (SPS) measures to facilitate agri-food exports.
- The UK will recognize Indian certifications and inspection systems for products like basmati rice, grapes, mangoes, seafood, and buffalo meat.
- Exporters will benefit from pre-listing of facilities without the need for batch-by-batch inspections, reducing delays and compliance costs.
- A bilateral SPS Committee will meet at least twice a year to resolve technical issues and review market access conditions.
Technical Barriers to Trade (TBT)
To reduce technical compliance barriers, the FTA outlines procedures for transparency and regulatory alignment.
- Both parties will notify new technical regulations at least 60 days in advance and allow public feedback from stakeholders.
- They will adopt international standards (ISO, Codex, IEC) wherever possible to promote harmonization.
- Mutual recognition of conformity assessment bodies, including testing and certification labs, will be encouraged in sectors such as electronics, machinery, toys, and food safety.
Trade Remedies and Safeguards
The FTA includes protective mechanisms for domestic industries facing unfair trade practices or import surges.
- Both countries retain the right to impose anti-dumping and countervailing duties if injury to domestic industry is proven.
- Bilateral safeguard measures can be applied if there is a sudden increase in imports causing serious injury, subject to investigation and review.
- Global safeguard measures are allowed in accordance with WTO rules and can be extended up to eight years with interim reviews.
Services Trade and Liberalization
The agreement liberalizes over 115 subsectors across 11 service categories, including finance, information technology (IT), education, and business services.
- The UK and India adopt a negative list approach, meaning all services are liberalized unless specifically excluded.
- Indian legal, accounting, engineering, and IT professionals will have improved access to UK markets, including pathways for temporary entry.
- Education providers and students benefit from simplified qualification recognition and mobility arrangements.
Professional Mobility and Business Travel
Enhanced provisions support cross-border movement of professionals, executives, and service providers.
- Short-term business visitors can stay up to 90 days without needing labour market tests.
- Intra-corporate transferees are allowed stays of up to three years, renewable for an additional two years.
- Independent professionals and contractual service providers in sectors such as IT, engineering, and design are granted access under defined quotas.
- Visa applications will be processed within three weeks by the UK and four weeks by India, with commitments to reduce administrative burdens.
Investment Protection and Capital Transfers
To promote investment, the agreement ensures non-discriminatory treatment and safeguards against arbitrary actions.
- Investors are guaranteed fair and equitable treatment and protection against expropriation without prompt and adequate compensation.
- Both parties allow free movement of capital, dividends, interest, and royalty payments.
- While there is no investor-state dispute settlement mechanism, disputes between governments are subject to structured consultations and binding dispute resolution panels.
Digital Trade and Data Governance
The FTA includes one of the most advanced digital trade frameworks signed by India to date.
- Electronic contracts, signatures, and authentication will have legal equivalence with traditional formats.
- Cross-border data flows are permitted with limited exceptions related to public security, health, and financial stability.
- The agreement prohibits the forced disclosure of source code or proprietary algorithms.
- Both countries agree to cooperate on areas like artificial intelligence, cybersecurity, digital identity, and e-governance.
Government Procurement
India gains access to the UK’s central government procurement market, which is estimated to be worth over US$ 135.44 billion annually.
- UK tenders above US$ 270,880 for goods and services and US$ 2.03 million for construction are open to Indian suppliers.
- Procurement must be transparent, with public notices, fair selection criteria, and equal access.
- Dispute mechanisms are in place for bidders who face discriminatory treatment or procedural errors.ss
Intellectual Property Rights
The agreement promotes cooperation and enforcement of intellectual property protections.
- Both countries commit to timely trademark and patent registration, including fast-track channels for qualifying applicants.
- India and the UK will cooperate on enforcement of copyright, trademark, and digital intellectual property (IP), including border control measures to prevent counterfeiting and piracy.
- A joint initiative supports recognition of geographical indications (GIs) such as Darjeeling Tea and Scotch Whisky.
- Annual Intellectual Property Rights (IPR) Dialogues will allow for regulatory updates and cooperation on emerging technologies.
Trade and Sustainable Development
The agreement includes binding obligations on labour rights, environmental protection, and climate goals.
- Both sides reaffirm their commitments under the Paris Agreement and biodiversity conventions.
- They commit to upholding International Labour Organization (ILO) standards, including prohibitions on forced and child labour.
- A joint subcommittee will oversee the environmental and social aspects of the agreement, with opportunities for civil society to engage in implementation reviews.
Micro, Small & Medium Enterprises (MSME) Support and Inclusive Trade
Recognizing the importance of small and medium enterprises, the FTA provides specific measures to facilitate their participation.
- Each country will establish a contact point and online information portals for MSMEs to access legal, regulatory, and procedural guidance.
- Capacity-building programs will be organized to help small exporters understand and meet regulatory requirements in both markets.
- Joint initiatives will promote digital inclusion, supply chain linkages, and sustainable business practices.
Dispute Resolution and Oversight
To ensure the agreement’s commitments are enforceable, a structured dispute resolution mechanism is included.
- Disputes are resolved through consultations, followed by a panel review and binding decision.
- The process includes clear timelines: hearings must commence within 45 days of dispute notice, and final reports must be issued within 120–150 days.
- Rulings will be made public, and compliance will be reviewed by the Joint Committee.
Sovereignty, Flexibility, and Evolution
The FTA respects each country’s regulatory autonomy and is designed to evolve over time.
- National security, taxation, and public health regulations are excluded from dispute coverage.
- Provisions are included for amendments, reviews every five years, and accession by additional territories.
- Both parties commit to mutual dialogue and adjustment based on economic, legal, and technological changes.
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