India–UK CETA in Force: What the First Three Months Reveal

The India–UK Comprehensive Economic and Trade Agreement (CETA) has been in force since 15 July 2026. The UK removed tariffs on about 99% of Indian goods on day one, India is liberalising roughly 90% of its tariff lines, and August bilateral trade rose 15% year on year. The real test now is utilisation: rules of origin, steel, carbon border rules and services access.

For years, the India–UK free trade agreement was a headline waiting for a start date. It slipped from April, to May, to July. On 15 July 2026 it finally became operational, and the question changed from will it happen? to will exporters actually use it?

Three months in, the early signals are encouraging. But a tariff cut on paper is not a sale in a shop, and the next two quarters will show whether CETA becomes a working trade corridor or a well-drafted text.

India–UK CETA at a glance

Item	Detail
Agreement	Comprehensive Economic and Trade Agreement (CETA)
Negotiations concluded	6 May 2025, after 14 rounds
Signed	24 July 2025, London
In force	15 July 2026
UK tariff cuts	About 99% of Indian goods, effective immediately
India tariff cuts	About 90% of tariff lines; 64% duty-free from day one, 85% over 10 years
Companion pact	Double Contribution Convention (DCC) on social security, in force the same day
Latest trade data	August 2026: bilateral trade up 15.08% year on year to nearly $2 billion
Key risks	Rules of origin, steel quotas, UK carbon border mechanism (2027), services access

How CETA got here

Negotiators concluded the deal on 6 May 2025 and ministers signed it in London on 24 July 2025, with Prime Ministers Narendra Modi and Keir Starmer present. The UK Parliament vetted the agreement in March 2026. In India, ratification runs through the executive and needs Cabinet approval, so there was no parliamentary vote to wait for.

The delay came in the final stretch. Officials first pointed to April, then to mid-May. The date that stuck, 15 July, was confirmed on the sidelines of the G7 Summit after the two governments resolved a late dispute over UK steel-import duties.

That sequence is worth remembering. Signing a trade agreement is the political moment. Entry into force is the legal one, and it depends on unglamorous work: customs notifications, updated tariff schedules and, as the steel episode showed, last-minute bargaining over sensitive sectors.

What changed on 15 July

On the UK side, tariffs on roughly 99% of Indian goods were removed immediately. Textiles, footwear, gems and jewellery, sports goods and toys were widely flagged as early beneficiaries. Longer term, Indian low- and mid-range electric, hybrid and hydrogen cars gain duty-free UK access, within an annual quota, six years after entry into force.

On the Indian side, tariffs fall on about 90% of tariff lines, with 64% going duty-free from day one and 85% eventually reaching tariff-free status over a decade. The most visible consumer example is Scotch and gin: duties dropped from 150% to 75% at entry into force and are due to fall to 40% over ten years.

On people and services, the DCC exempts eligible professionals on temporary assignments from paying social security in both countries at once. Reports differ on whether the exemption runs three or five years, so companies should check the final text before planning around it. CETA also removes the UK’s economic needs test for several categories of service providers and business visitors.

What the first data shows (and what it doesn’t)

The latest figures I could verify cover August, the first full month under CETA:

•         Bilateral trade: up 15.08% year on year to nearly $2 billion

•         Indian exports to the UK: up 10.35% to $1.26 billion

•         Electrical machinery exports: more than doubled to $181.62 million

•         Pharmaceuticals: up 11.61% to $71.29 million

•         Iron and steel: up 46.01% to $67.70 million

Two cautions.

First, imports from the UK grew faster than Indian exports, with a sharp rise in silver shipments accounting for much of the increase, so the headline growth is not all about manufactured goods.

Second, one month cannot separate the effect of the treaty from commodity prices, seasonality or order timing.

It is also worth separating what has been observed from what has been modelled. Forecasts of engineering exports above $7.5 billion by 2029–30, or of jewellery exports doubling within two to three years, remain projections. So do the 15–20% annual growth figures for IT and IT-enabled services. None of them are results yet.

Four frictions that will decide the outcome

1. Rules of origin

Zero duty only applies if goods qualify as originating in India. Electronics, electrical machinery, auto components and pharmaceuticals rely heavily on imported inputs, many sourced from China, so product-specific origin rules will determine who actually benefits. The paperwork runs both ways: UK exporters must register with HMRC before making origin declarations, or Indian importers cannot claim preferential rates.

2. Steel

Steel almost derailed the launch, and it remains the most politically sensitive line. A separate understanding is meant to keep roughly 85% of India’s steel exports outside the UK’s newer steel restrictions. The early jump in steel exports is promising, but the quota mechanics deserve close monitoring, and published numbers would remove uncertainty for exporters.

3. Carbon border costs

From 2027, carbon-intensive exports face the UK’s Carbon Border Adjustment Mechanism. A tariff-free agreement does not exempt exporters from a carbon charge, which makes decarbonisation of Indian steel, aluminium and similar sectors a trade issue, not only a climate one.

4. Services and professional mobility

The UK’s own assessment says CETA does much more for goods than for services. Mutual recognition arrangements for nursing, accountancy and architecture are due to be scoped within 12 months of entry into force, with negotiations ideally concluding within three years after that. For India’s services economy, that is a longer runway than many headlines suggested.

The strategic read

CETA is best understood as more than a tariff schedule. It is described as the UK’s most ambitious bilateral deal since Brexit, and it sits within the India–UK Roadmap 2030, which targets $100 billion in bilateral trade by 2030. For India, it is one more test of a strategy built on bilateral pacts with major developed markets, where it must open its own market in return for access.

The agreement also shows how trade diplomacy now works. Social security (the DCC), mobility, carbon rules and steel safeguards all sit alongside tariffs in the same package. Whoever manages the implementation, through awareness drives, customs readiness and dispute resolution, will shape the outcome as much as the negotiators did. State governments are already running sector-wise awareness sessions for exporters, a sign that the gap between a signed deal and a used one is real.

What to watch next

1.       Monthly trade data for September and October, to see whether August was a one-off

2.       Preferential-tariff utilisation figures, once published by either government

3.       Steel quota implementation, and any new disputes

4.       Carbon border guidance ahead of 2027

5.       Scoping of professional recognition by mid-2027

6.       Clarity on the DCC exemption period

Frequently asked questions

When did the India–UK free trade agreement come into force? CETA entered into force on 15 July 2026, together with the Double Contribution Convention on social security.

What does CETA mean for Indian exporters? About 99% of Indian goods enter the UK duty-free or at reduced tariffs, covering nearly all trade by value. Benefits depend on meeting rules of origin and completing customs paperwork.

How much will UK goods get cheaper in India? India is cutting tariffs on about 90% of tariff lines, with 64% duty-free from day one and 85% over ten years. Whisky and gin duties fell from 150% to 75%, falling to 40% over ten years.

What is the Double Contribution Convention? It prevents professionals on temporary assignments, and their employers, from paying social security in both countries at once. Reports differ on whether the exemption lasts three or five years.

Has trade increased since CETA began? In August 2026, bilateral trade rose 15.08% year on year to nearly $2 billion, with Indian exports up 10.35%. One month of data is not yet a trend.

What are the main risks? Rules of origin, steel quota arrangements, the UK’s carbon border mechanism from 2027, and limited early gains for services.