The India-UK Comprehensive Economic and Trade Agreement (CETA) comes into force today (July 15, 2026), along with its companion Social Security Agreement, the Dual Contribution Convention (DCC).Commerce Secretary Rajesh Agrawal called it a “gold standard” agreement covering 30 chapters that went well beyond tariff reductions. The agreement was signed in London on July 24 last year by Commerce and Industry Minister Piyush Goyal and UK Business and Trade Secretary Jonathan Reynolds in the presence of the Prime Minister Narendra Modi Then there’s British Prime Minister Keir Starmer, after 14 rounds of negotiations starting in 2022.The government has repeatedly described it as a “people-centred” deal, with farmers, fishermen and micro, small and medium-sized enterprises positioned as the biggest beneficiaries, making it a high-priority topical topic.
In simple terms, this concept
- A free trade agreement (FTA) is an agreement between two or more countries to reduce or eliminate tariffs and other trade barriers to trade in goods, usually services, between the two countries.
- CETA is a deeper version of FTA. In addition to tariffs, it covers services, digital trade, government procurement, intellectual property, investment, labour, environment and gender, bringing it closer to what is commonly known as CEPA (Comprehensive Economic Partnership Agreement).
- Under WTO rules, countries must treat all trading partners equally (most-favored-nation or MFN principle). Under Article 24 of the GATT, free trade agreements are a permitted exception to this rule, allowing for preferential treatment between signatory countries.
- The India-UK CETA is India’s most ambitious trade agreement with a developed economy to date, both in terms of the scale of market opening and the range of issues covered.
how it works
The UK will immediately remove tariffs on 99% of India’s tariff lines, accounting for approximately 97.7% of trade. This eliminates tariffs of up to 70% on processed food, up to 21.5% on seafood, up to 18% on engineering products and auto parts, up to 16% on leather and footwear, up to 12% on textiles and clothing, and up to 8% on chemicals and pharmaceuticals.India has opened up 89.5% of its tariff lines, covering 91% of the value of UK exports, although only about 24.5% of these have immediate duty-free access. The remaining schemes will be implemented in a phased manner over 5, 7 or 10 years, especially for industries under Make in India or Production Related Incentive Schemes.Notably, India has cut tariffs on automobiles from over 100% to 10% under import quotas, and on Scotch whiskey and gin from 150% to 75% on day one, and to 40% by year 10 under an annual quota of 2 million liters.Both sides barred concessions in sensitive areas. India excluded dairy products, cereals, millets, pulses, edible oils, apples, several vegetables, gold, jewellery, lab-grown diamonds, smartphones, fiber optics and ships.The simplified rules of origin mechanism allows exporters to conduct their own origin certification, and authorized economic operators can obtain faster customs clearance.Non-tariff barriers are addressed through dedicated chapters on sanitary and phytosanitary (SPS) standards and technical barriers to trade (TBT), aiming to prevent quality or safety regulations from becoming disguised trade restrictions.Implementation is overseen by joint committees and sectoral sub-committees and working groups covering rules of origin, mobility, intellectual property, procurement and gender. Any modifications require the consent of both parties and will take effect 60 days after both parties confirm domestic approval.
Governing Bodies and Agreements
- Ministry of Industry and Commerce (Ministry of Commerce): Nodal department for CETA negotiations.
- Directorate General of Foreign Trade (DGFT): Implement tariff schedule and origin certification in India.
- Dual Contribution Covenant (DCC): The relevant social security agreement, signed on February 10, 2026, exempts Indian professionals temporarily posted in the UK from double social security contributions for up to five years, benefiting more than 75,000 professionals in more than 900 companies.
- India-British Joint Commission: The governance body established under CETA to oversee implementation.
- Article 24 of the General Agreement on Tariffs and Trade (WTO): Allow free trade agreements as a legal basis for exceptions to the most-favored-nation principle.
- India-UK Vision 2035: This will accompany CETA’s development of a broader strategic roadmap covering defence, climate and education cooperation, building on the 2021 Comprehensive Strategic Partnership.
Relevance to India
- Farmer: Duty-free access is available for turmeric, pepper, cardamom and processed products such as mango pulp, pickles and pulses. Some 97.1% of processed food tariff lines have immediate duty-free access to the UK agricultural import market worth more than $63 billion. Sensitive raw materials such as dairy products, cereals, millets, edible oils and apples remain protected to protect rural incomes.
- Fishermen: The removal of customs duty on seafood products of up to 21.5% is expected to help seafood exporters in the states of Kerala, Andhra Pradesh, Gujarat, Tamil Nadu and Odisha.
- Small, medium and micro enterprises: Labor-intensive sectors such as textiles (which previously faced UK tariffs of up to 12%) and leather and footwear (up to 16%) moved to zero tariffs, putting Indian exporters on par with rivals such as Bangladesh and Vietnam. Self-certification of origin reduces paperwork, and the government has pledged to provide training and digital platform support to help small exporters understand rules of origin and UK certification requirements.
- Services and mobility: Dedicated quota of 1,800 places per year for Indian chefs, yoga instructors and classical musicians, and easier movement for business visitors and professionals, supporting small service providers as well as large IT and financial companies.
- challenge: Trade analysts point out that even with zero tariffs, India’s MSMEs may still struggle to cope with the UK’s stringent sanitary and phytosanitary measures and technical compliance standards. There are also concerns that if ease of access to UK farming is expanded in future rounds, it could put pressure on specific rural areas, despite being currently excluded.
- scale: The bilateral trade in goods volume in fiscal year 2026 is approximately US$25 billion, and the total trade volume is close to US$56 billion; the two countries aim to double this figure by 2030.
preliminaries fact box
Power exercises
“The India-UK CETA is described as a people-centred trade agreement.” A critical look at its likely impact on India’s agriculture and MSME sectors, highlighting the opportunities created and challenges that remain.
Five key terms to remember
- CETA (Comprehensive Economic and Trade Agreement): Deep free trade agreements cover goods, services, investment and regulatory cooperation, not just tariffs.
- Most Favored Nation (MFN): WTO principles require equal trade treatment for all partners, with free trade agreements being a permitted exception.
- Rules of origin: The criteria used to determine the “economic nationality” of a traded product, determining its eligibility for preferential tariff treatment.
- Dual Contribution Covenant (DCC): A social security agreement that prevents workers from paying social security twice in their home country and in the host country.
- Sensitive/excluded list: Products for which a country does not enjoy tariff concessions in a trade agreement to protect domestic producers.
FAQQ: What is the difference between FTA and CEPA?Free trade agreements typically focus on reducing tariffs on goods. CEPA (or CETA in this case) is broader and also covers services, investment, intellectual property and regulatory cooperation.Q: Does a free trade agreement violate WTO rules?Won’t. Article 24 of GATT expressly allows free trade agreements and customs unions as exceptions to the MFN principle, provided they meet certain conditions regarding coverage and transition periods.Q: Is the India-UK CETA the first major trade agreement between India and a developed Western economy?Following earlier agreements such as India-UAE CEPA and India-Australia ECTA, this is one of the most comprehensive such agreements for India, but it is the first free trade agreement of this depth with a G7 economy.Q: What are rules of origin? Why are they so important to MSMEs?They determine whether a product truly originates in the exporting country and thus qualifies for preferential tariffs. For small exporters, meeting documentation and certification standards can be a compliance burden.
