India-UK FTA To Come Into Force From July 15: Key Impacts For Businesses And Consumers | Explained

India-United Kingdom comprehensive economic and trade agreement (CETA) or Free Trade Agreement (FTA)  that was signed on July 25, last year, will come into force from July 15, 2026. The agreement, which was finalised after several rounds of negotiations, will be the sixth FTA to be implemented by the Narendra Modi government. 

Earlier has fully implemented bilateral free trade agreements with Mauritius, the UAE, Australia, EFTA (European Free Trade Association), and Oman. 

The India-UK trade agreement will be one of the biggest for New Delhi amongst those implemented in the past few years, as it unlocks duty-free access for nearly 99 per cent of Indian exports. Below are some of the key points to understand the significance of CETA for Indian businesses and consumers:

Key Benefits Of The India-UK FTA For Indian Businesses

All labour-intensive sectors, be it textiles, footwear, garments, carpets, processed food, agri products, cereals, fruits and spices will enter the UK market with zero duty from July 15 onwards. Additionally, meat, fish, and processed products will also have the opportunity to grab the market potential with zero duty. At present, these goods enter the UK market at a duty range between 4 and 16 per cent.

Other sectors that could benefit from the deal include automobiles, motorcycles and their parts; appliances, electronics and manufactured metal products; and ceramics, glass, stone and cement products.

On the other hand, British goods such as salmon, appliances, lamb, electronics, soft drinks, chocolates, cosmetics, soaps, perfumes, shaving creams and nail polish could fall in prices in the Indian market due to lower tariffs.

Additionally, India brought the tariff on silver, the largest import item from the UK, to zero in 10 years.

Which Sectors Will Gain The Most From The Trade Deal?

Automobile Sector

 India’s agreement on a sharp reduction in import duties on UK-made fully-built cars and trucks is something vital under the trade agreement, as the nation has agreed on such a demand for the very first time. 

Tariffs on high-end UK-built cars will come down to 10 per cent from 110 per cent in a phased manner.

While petrol and diesel vehicles will be exempted from the outset, electric, hybrid and hydrogen passenger cars will be given priority only from the sixth year. This provides five years of protection for Indian electric vehicle manufacturers.

Under the agreement, UK-made trucks imported as complete units will also be given duty relief. The existing 44 per cent duty will be reduced to 8.8 per cent within the quota over 5 years. The quota will increase from 2,500 trucks in the first year to 3,500 trucks over 5 years.

In return, the UK has granted concessions to Indian electric, hybrid and hydrogen passenger cars. The UK’s normal duty on passenger cars is 10 per cent. Under the CETA agreement, eligible Indian vehicles exported within the annual quota will enter duty-free, giving them a 10 percentage point advantage.

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Alcohol Industry

Duties on a range of high-end beverages under the agreement. The regular 150 per cent duty on qualifying products will be reduced to 110 per cent in the first year and then to 75 per cent in the tenth year.

India's duties on Scotch whisky will be reduced from 150 per cent initially to 75 per cent and then to 40 percent in ten years.

No Duty Reduction on Concession Product

Despite the free trade agreement, India does not offer any duty exemptions on items such as fresh apples, walnuts, buttermilk, modified buttermilk, blue-veined cheese, certain seed varieties, gold nuggets and smartphones.

The UK's list of exemptions includes various meat products, egg-based products, partially milled or fully milled rice, and solid silver cane or beet sugar.

Government Procurement Under Deal 

India has granted market access to UK suppliers in government procurement. For the first time, India will open about 40,000 high-value contracts from central ministries and departments in sectors such as transport, green energy, and infrastructure to bidders from the UK.

UK suppliers receive treaty-backed access to covered central government procurement in India, and firms meeting a 20 pc UK-content threshold may qualify as Class 2 Local Suppliers.

India Keep Safeguard For Vital Markets 

Rules of Origin: The rule of origin determines the economic nationality of a product, i.e. whether it originates in India, the UK or a third country. These rules are essential because CETA’s lower tariffs only apply to goods originating in India and the UK.

STEEL SAFEGUARD: India exported about $900 million worth of steel and steel products to the UK in FY2026, accounting for about 7% of India’s total exports of $13.4 billion, according to GTRI. But the business could come under pressure as the UK tightens rules on steel imports from July 1, 2026.

(With Inputs from PTI)