India-U.K. Trade Deal: 20% Boost in Agri Exports and Key Sector Gains

The recent signing of the India-U.K. Comprehensive Economic and Trade Agreement (CETA) on July 24, 2025, marks a significant milestone expected to provide considerable advantages for numerous Indian export-oriented sectors, including agriculture, textiles, leather, chemicals, and engineering goods, as stated by informed officials.

With this agreement, the U.K. is set to experience an average tariff reduction of 12 percentage points, dropping from 15% to just 3% for products exported to India. This deal facilitates the removal or reduction of tariffs on 90% of the tariff lines, effectively covering 92% of U.K. exports to India.

Key items like whiskey, aerospace components, automobiles, and electrical machinery will enjoy more affordable access to the Indian market thanks to this agreement.

The agreement was officially signed in the U.K. by Union Commerce and Industry Minister Piyush Goyal and Jonathan Reynolds, the U.K. Secretary of State for Business and Trade, in the presence of the Prime Ministers of both nations.

According to a government official, “In agriculture, India exports $36.63 billion globally, while the U.K. imports $37.52 billion, yet only $811 million comes from India. This indicates a significant opportunity for growth in high-value agricultural products.” Duty-free access is projected to boost agriculture exports by over 20% within the next three years.

India has chosen not to open its most sensitive sectors, including dairy products, apples, oats, and edible oils, to the U.K. market. This strategic decision reflects India’s focus on safeguarding food security, ensuring price stability, and supporting vulnerable farming communities.

Enhancing Competitive Advantage

The deal is poised to enhance India’s competitive advantage in various agricultural and food-related products. For example, in the export of fresh grapes, India now has an edge over Brazil and is on par with leading exporters like Egypt and South Africa. In the processed food sector, India is expected to make strides against competitors such as the U.S., China, and Thailand.

Notably, in processed foods, tariffs on 99.7% of the products have been reduced from as high as 70% to zero, significantly benefiting Indian exporters. This shift enables India to compete more effectively with the U.S., China, Thailand, and Vietnam in baked goods and fresh vegetables.

The agreement also favors India in exporting sauces, as it gains an advantage over competitors from the U.S., Japan, Thailand, China, and Malaysia. Shrimp and tuna exports, currently taxed between 4.2% and 8.5%, will become completely duty-free, unlocking potential growth, especially given that India only accounts for 2.25% of the U.K.’s marine imports.

In the textiles sector, the removal of tariffs, previously averaging 12%, will alleviate India’s duty disadvantage relative to countries like Bangladesh and Cambodia.

The CETA is projected to result in a substantial increase of 30-40% in India’s chemical exports to the U.K., estimating around $650-750 million within the first year after implementation. Leather exports are expected to capture an additional 5% market share in the U.K.

Benefits for the U.K.

This agreement stipulates that India will eliminate or reduce tariffs on 90% of its tariff lines, covering 92% of U.K. exports. India has committed to removing tariffs on 64% of these lines upon the agreement’s initiation, with plans for 85% of tariff lines to become eligible for tariff-free entry into India over a decade.

The U.K. government noted that Indian tariffs on their products will decrease from 15% to 3%. This reduction will make it easier for British businesses to sell items ranging from soft drinks and cosmetics to cars and medical devices in the Indian market.

A notable component of this tariff reduction includes whiskey imports from the U.K., which will see an immediate drop from 150% to 75%, with a gradual decrease to 40% over the next ten years.

Aerospace components from the U.K. will incur no tariffs, down from 11%, and auto imports will benefit from a substantial reduction—100 percentage points—from up to 110% to a maximum of 10% under a specific quota. Additionally, electrical machinery will see tariffs reduced to either 0% or 11%, depending on the product, from a previous maximum of 22%.

Published – July 24, 2025 06:49 pm IST