India and the United Kingdom sign a trade agreement in July 2025

India and the United Kingdom began negotiations for a free trade agreement in January 2022, after the United Kingdom's departure from the European Union, building on an Enhanced Trade Partnership launched in 2021. After 14 rounds of negotiations over nearly three and a half years, the two sides concluded the agreement on 6 May 2025 and signed it on 24 July 2025, during Prime Minister Narendra Modi's visit to London. The agreement is formally called the India-United Kingdom Comprehensive Economic and Trade Agreement, or CETA.

Under the agreement, the United Kingdom eliminates duties on about 99 per cent of Indian exports, covering textiles, leather, engineering goods, marine products, gems and jewellery, and other labour-intensive sectors. India, in turn, reduces or eliminates tariffs on about 90 per cent of tariff lines for British goods, with 85 per cent becoming fully duty-free over ten years. The average tariff on British goods imported into India was expected to fall from about 15 per cent to about 3 per cent once staging was complete.

Two headline cuts illustrate the bargain. Tariffs on Scotch whisky and gin fall from 150 per cent to 75 per cent when the agreement takes effect, and then to 40 per cent over ten years. Tariffs on British cars, previously up to 110 per cent, fall to 10 per cent under a quota system, phased over several years. From day one, India also removes tariffs on about 64 per cent of British products, including salmon, lamb, aircraft parts, machinery, and electronics.

The agreement covers more than goods. It includes chapters on services, digital trade, financial services, intellectual property, innovation, sustainability, and government procurement, totalling 30 chapters. It also includes provisions on business mobility, which were a key Indian interest, and on rules of origin, which determine whether a good qualifies for preferential treatment and which are administered in India through Central Board of Indirect Taxes and Customs rules.

Critics noted that tariff cuts are phased, that quotas limit the immediate benefit for cars, and that the agreement's long-run gains depend on implementation, including the treatment of steel, which became a sticking point in 2026 as the United Kingdom introduced safeguard measures. Supporters argued that the agreement's value lies less in any single tariff cut than in the signal it sends: that India is willing to open its market in a negotiated, reciprocal way, while protecting sensitive sectors such as dairy and certain agricultural products.