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In May 2025, India and the United Kingdom concluded a landmark free-trade agreement (FTA) after three years of negotiations. Following Brexit in 2017, the FTA sees the UK more deeply integrating into the international supply chain and increases India’s global trade. During recent years, India has reshaped its trade policies to adapt to a changing global landscape. On 24 July 2025, India and the UK signed the FTA into a comprehensive economic and trade agreement (CETA), a landmark in trade developments for each country. The CETA will likely be a starting point for negotiations India will likely have with other countries and groups, such as the US and the European Union.
Shankey Agrawal
Partner
BMR Legal
The CETA aims to enhance India-UK trade by liberalising domestic markets, thereby reducing tariff rates for key industries. Such sectors include textiles, leather, marine products, jewellery, toys, chemicals and agricultural products. The CETA will eliminate tariffs against 99% of India’s exports to the UK. This means that most goods will enter the British market with no duties imposed. In return, India will remove or lower duties for 89.5% of British imports. This represents more than 91% of the UK’s exports to the country. The UK will enjoy immediate free trade on 24.5% of its exports to India, while tariffs on the rest will be lowered during the next five to 10 years.
The CETA will also improve professional mobility in sectors such as IT, financial services, education and healthcare. A significant feature of the CETA is the Double Contribution Convention, by which employers of those moving to the UK will be exempt from paying national insurance contributions for up to 36 months. The CETA also promotes digitally delivered services, increasing India’s global competitiveness. To help trading, CETA simplifies the rules of origin requirements, allowing exporters to self-certify the origin of goods electronically.
Harsh Shukla
Counsel
BMR Legal
The automotive sector will be one of those benefitting most from the India-UK CETA. By immediately removing the 18% export duty on Indian original equipment manufacturers (OEM), the agreement improves India’s price competitiveness in the UK market, creating opportunities for greater export growth.
The CETA introduces a 15-year plan to phase out duties on luxury car imports. For petrol cars with an engine capacity of 3000cc, the base custom duty rate is expected to be slashed from 110% to 10%. The phasing out of duties will allow Indian premium brands to scale up production and be more competitive in the long run.
The UK, home to automobile companies such as Land Rover, Jaguar and Rolls Royce, may see an increase in production. This is because the CETA will remove barriers to premium car imports to India. Indian car manufacturers entering the premium and sub-premium segments will gain a foothold in the UK market. This will enable them to explore the European market and encourage consumers to embrace their brands. However, with regard to electric vehicles (EV), the Indian government has a policy of protecting that sector from cheap EVs brought in from abroad. The duty exemption thus does not apply to EVs costing up to GBP40,000 (USD53,700). But However, Indian EV manufacturers will enjoy duty exemption from the CETA’s sixth year, giving Indian producers time to adapt to the requirements of foreign markets.
Pratha Khanna
Associate
BMR Legal
India’s automobile sector contributes 6% to the nation’s GDP and is 35% of Indian manufacturing GDP. The boost from CETA to the Indian automobile sector will couple with the government’s Make in India initiative. The signing of the India-UK CETA may result in the shift of manufacturing hubs from countries such as China to India. This will move India higher in global trade rankings.
Taken as a whole the CETA aims to bring about a strategic economic alignment and to reconfigure sectoral and trade patterns. Its success will depend on how well India manages to take advantage of the transition periods given, upgrades domestic manufacturing capacities and maintains regulatory certainty to take advantage of the opportunities it allows. If implemented with goodwill and strategic planning, the CETA will make India a global automotive and services leader. At the same time, the agreement will invigorate the post-Brexit trade landscape of the UK.
Shankey Agrawal is a partner, Harsh Shukla is counsel and Pratha Khanna is an associate at BMR Legal
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