India-UK trade pact takes effect, lowering tariffs and expanding services access

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India-UK trade pact starts

Highlights

India-UK trade pact grants Indian exporters immediate duty-free access to most British tariff lines, benefiting sectors like textiles, leather, marine products and processed foods.
Britain eliminates duties on 96.8% of tariff lines and secures access to India's £90 billion procurement market and services segments including finance, education, and automobiles via phased quotas.
India exported $13.44 billion of goods to Britain and imported $11.68 billion in 2025-26, with bilateral services trade at $35.44 billion in 2024 and Indian professionals gaining National Insurance exemptions for up to five years.

Tariff cuts and market opening begin

As reported by Reuters, the India-UK Comprehensive Economic and Trade Agreement gives Indian exporters immediate duty-free access to most British tariff lines, supporting sectors including textiles, leather, footwear, marine products, gems and jewellery, and processed foods.

Britain gains wider entry into one of the world's fastest-growing major economies through phased tariff cuts and quotas in areas such as automobiles, along with openings in procurement, financial services, education, insurance and professional services. Piyush Goyal, India's trade minister, says the agreement opens new avenues for trade, investment and innovation and creates opportunities for Indian businesses.

Britain removes duties immediately on 96.8% of tariff lines, covering 97.7% of trade value. India removes duties at once on 64.1% of tariff lines and phases out tariffs on another 21%, while keeping sensitive products outside the deal.

Trade flows and sector benefits

Indian officials expect gains in segments where British tariffs had ranged from 4% to 20%. Duties on marine exports, textiles, leather, footwear, gems and jewellery are eliminated, which strengthens the competitiveness of Indian suppliers in the British market.

Britain is set to benefit from India's calibrated opening in automobiles and alcoholic beverages. Passenger vehicle imports are subject to a phased quota system, with 37,000 completely built units allowed each year at preferential tariffs.

The services package expands market access across 137 sub-sectors, including IT, business services, telecoms, finance and education, and eases temporary entry for business visitors, transferees, investors, service suppliers and independent professionals. A linked Double Contribution Convention exempts eligible Indian professionals and employers from paying into Britain's National Insurance system for stays of up to five years, benefiting about 75,000 workers and 900 employers.

India exported $13.44 billion of goods to Britain and imported $11.68 billion in 2025-26, while bilateral services trade totalled $35.44 billion in 2024, with India recording a services surplus of nearly $7.9 billion, according to Indian trade ministry data. The pact also gives Indian suppliers access to Britain's government procurement market, estimated at about £90 billion, while India offers reciprocal opportunities worth around $114 billion.

Our earlier coverage of India’s June 2026 trade data noted that the goods trade deficit hit a five-month high as imports rose much faster than exports amid elevated commodity prices. We also highlighted that this trend could widen the current account deficit to around 1.5% of GDP in Q1 FY2027, underscoring pressure on India’s external sector despite solid export growth in key categories.

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