A comprehensive economic and trade agreement between India and the UK came into force on Wednesday. The agreement, signed in London on July 25, 2025, will open up one of the world’s largest markets for Indian exporters and make several premium British products affordable for Indian buyers. According to trade experts, the deal will deepen investment ties, create jobs and give a new impetus to India’s manufacturing and services sectors.
The first noticeable impact of the deal for Indian consumers will be lower prices of goods imported from the UK. Scots whisky, premium British cars, luxury motorcycles, cosmetics, chocolates, biscuits, medical equipment and selected food items will be phased out. Until now, imported British cars were subject to tariffs of up to 110 percent, but under the agreement the tariffs will be gradually reduced based on fixed quotas.
Indian exporters will benefit the most from this deal. The agreement provides zero duty on around 99 per cent of Indian exports to the UK. This means that thousands of Indian products that previously faced import duties in the UK can now enter the market duty-free, allowing Indian products to easily compete with European and Chinese products. Millions of Indians engaged in sectors such as textiles and apparel, leather and footwear, gems and jewellery, marine products, engineering products, auto components, processed foods, chemicals, pharmaceuticals and agricultural products are expected to benefit the most from this facility.
The agreement will have a significant impact not only on the goods but also on the services sector. The deal, which covers 137 service sub-sectors, will give Indian IT companies, consulting firms, engineers, architects, accountants, healthcare and education service providers greater access to the UK. Also, under the ‘Double Contribution Convention’, Indian professionals working temporarily in the UK will not be required to make social security contributions in either country for five years, which will reduce costs for both employees and employers.
Prime Minister Narendra Modi described the agreement as a “historic milestone” and said it would create opportunities for farmers, workers, MSMEs, startups and innovators.