Key benefits of the UK-India Free Trade Agreement
Following negotiations which began in 2022, the UK-India Free Trade Agreement, formally known as the Comprehensive Economic and Trade Agreement (CETA) entered into force on 15 July 2026. CETA constitutes one of the UK’s most significant trade agreements since Brexit took effect and signifying improved market access and supply chain opportunities for businesses whose supply chains have links to the two territories.
- Reduced tariffs
For many businesses, the key benefit of CETA will be the significant tariff savings and better market access for companies trading between the UK and India.
Under the agreement, Indian exporters will benefit from enhanced access to the UK market due to the fact that 99% of goods originating in India can be imported into the UK duty free or with reduced tariffs. UK businesses sourcing from India may also benefit from lower import costs and greater supply chain diversification.
For UK exporters selling into India, India will reduce or eliminate tariffs on 90% of tariff lines, covering 92% of current UK exports, with 64% of tariff lines becoming duty-free from day one (over a 10 year implementation period, 85% of tariff lines will benefit from tariff-free access). This equates to India cutting tariffs worth roughly GBP 400 million on UK-origin goods, which will more than double after 10 years due to the staging provided for in CETA. This is particularly significant for UK exporters, since India’s tariffs can typically be high.
- Rules of Origin
CETA sets out the product-specific rules of origin that a product must meet in order to benefit from reduced tariffs, which require that a product must either (i) be wholly obtained or (ii) significantly transformed through processing in either the UK or India. Companies wishing to benefit from preference should ensure their goods meet the relevant rule of origin, and that they have the required proof of origin to substantiate this.
Businesses should also be aware of CETA’s non-alteration rules. While goods can be routed through logistics hubs and stored, relabelled or split into smaller consignments in third countries, they must remain under customs control and cannot undergo further working or processing.
- Eased customs procedures
CETA aims to help goods move across UK-India borders more efficiently and includes the following simplifications:
- Eligible businesses may be able to defer payment of customs duties until after goods are released, reducing the immediate financial impact of imports;
- Reduced data requirements, aggregated declarations and customs simplifications are available for trusted traders;
- Customs authorities are targeting clearance within 48 hours of arrival, where documentation is in order and no physical checks are needed; and
- Both countries have committed to electronic customs processes, including electronic declarations, electronic duty payments and increased use of automated risk-management systems.
Taken together, along with the other simplifications set out in CETA, these measures should reduce border friction, improve supply chain predictability and lower the administrative costs of trading between the UK and India.
- Key sectors
Key sectors benefiting from CETA include: automotives, consumer and cosmetic goods, and medical goods.
UK exporters can now enjoy lower or no tariffs on import into India for numerous products, including: UK vehicles, which see a significant drop from 110% duties to 10%; spirits such as Scotch whisky and gin, which is growing in popularity with Indian customers and can now be imported into India at a significantly decreased tariff rate; as well as medical devices, pharmaceutical and machinery, which benefit from enhanced market access and lower tariffs.
Simultaneously, Indian exporters are able to ship goods including Indian-origin textile and clothing to the UK with duty reductions, as well as gems and jewellery originating in India. UK companies whose supply chains source such goods from India will also benefit from these facilitations on import into the UK.
- Importance of compliance
The commercial benefits of CETA have the potential to be significant for businesses trading between, sourcing from, or investing in the UK and India. However, businesses will only be able to access these benefits if they can satisfy the agreement’s detailed requirements, particularly the product-specific rules of origin, as well as any manufacturing, sourcing and non-alteration conditions that apply.
For many businesses, this will require more than simply identifying a preferential tariff rate. Importers and exporters should take proactive compliance steps including:
- Assessing whether their products qualify as originating;
- Reviewing supply chain structures and bills of materials;
- Validating supplier origin data; and
- Ensuring they have the documentation, records, and proof of origin needed to support preference claims.
Businesses should also review their internal customs classification and valuation, update internal compliance procedures, and consider whether changes to sourcing, production or distribution models are needed to ensure their products qualify for preferential origin.
While navigating these requirements can be complex, getting them right is extremely important as incorrect preference claims can result in denied preferential treatment, retrospective duty assessments, interest and penalties, as well as supply chain disruption. Businesses that take proactive steps now to understand the agreement and prepare their compliance processes will be best placed to capture the commercial benefits that CETA has to offer.
See our previous Blog posts on the UK-India CETA here: India/ UK: India and UK Agree ‘Landmark’ Free Trade Agreement – Global Import Blog.
***
Baker McKenzie’s India Practice
Led by our Global India Practice Steering Committee, Baker McKenzie has one of the largest India practices among international law firms, with more than 300 lawyers across 74 offices actively working on India-related matters, and more than 60 years of experience in the Indian market. This positions us as a leading firm in supporting international clients seeking to do business with India and in supporting Indian clients seeking to enter or expand into the UK.
Our pool of legal talent and track record has been recognised by several industry awards, as demonstrated by Baker McKenzie being a three-time winner of the ALB India Law Awards’ International Law Firm of the Year award and our ranking as Band 1 in Foreign Law Firms for India-related work by the India Business Law Journal for the past ten consecutive years.
Find out more here: India | Locations | Baker McKenzie
See also Baker McKenzie’s Spotlight on India for more trends and business considerations for companies looking to do business in India, here: Spotlight on India | Insight | Baker McKenzie
***
