India and the United Kingdom began implementing their landmark free trade agreement on Wednesday, opening a new phase in bilateral economic relations by cutting tariffs on thousands of products and expanding access for services companies and professionals in both markets.
Under the Comprehensive Economic and Trade Agreement, a broad range of Indian-made goods can now enter the U.K. market duty-free. Labor-intensive industries including textiles, footwear, leather, marine products, processed foods, gems and jewelry are expected to be among the principal beneficiaries.
The Agreement on Social Security also entered into force on July 15, according to the Press Trust of India. The accompanying arrangement is intended to support professionals working temporarily between the two countries while reducing overlapping social security obligations.
Indian Prime Minister Narendra Modi welcomed the implementation of both agreements, describing the occasion as an important step in strengthening economic relations between India and the U.K.
“With the Comprehensive Economic and Trade Agreement and the Agreement on Social Security coming into force, our economic linkages are set to deepen further,” Modi said in a social media post.
New export opportunities
Modi said the Comprehensive Economic and Trade Agreement would provide fresh momentum to India’s farmers, entrepreneurs and micro, small and medium-sized enterprises.
He noted that several strategically important sectors would gain wider access to the U.K. market as tariff barriers are removed or reduced.
The agreement is also expected to deepen cooperation between the two countries in technology, professional services and innovation while supporting greater mobility for skilled Indian workers.
Modi said the Agreement on Social Security would provide invaluable assistance to Indian professionals working temporarily in the U.K. while strengthening the competitiveness of Indian companies.
The trade agreement gives Indian exporters immediate duty-free access to most U.K. tariff lines. Britain has removed duties on 96.8 percent of tariff lines from the date of implementation, covering 97.7 percent of the value of traded goods.
India, meanwhile, has immediately eliminated tariffs on 64.1 percent of its tariff lines and will phase out duties on a further 21 percent. Sensitive products remain excluded from the liberalization commitments.
The tariff reductions are particularly significant for Indian products that previously faced U.K. import duties ranging from 4 percent to 20 percent..
Key sectors benefit
Indian textiles, leather products, footwear, marine goods, gems, jewelry and processed foods will benefit from the elimination of U.K. duties, making them more competitive against products from countries already enjoying preferential access to the British market.
Britain will gain greater access to one of the world’s fastest-growing major economies through phased tariff reductions and import quotas.
British companies are expected to secure new opportunities across automobiles, alcoholic beverages, financial services, education, insurance, professional services and government procurement.
Passenger vehicle imports into India will be covered by a phased quota system. Under the arrangement, 37,000 completely built vehicles can enter the Indian market annually at preferential tariff rates.
The services component expands market access across 137 subsectors, including information technology, telecommunications, business services, finance and education.
It also facilitates temporary entry for several categories of professionals, including business visitors, employees transferred within companies, investors, contractual service suppliers and independent professionals.
India’s Trade Minister Piyush Goyal said the agreement would create new avenues for trade, investment and innovation while generating opportunities for Indian companies.
Social security support
The linked Double Contribution Convention will exempt qualifying Indian professionals and their employers from paying contributions into the U.K. National Insurance system for assignments lasting up to five years.
The measure is expected to benefit approximately 75,000 Indian employees and around 900 employers. It is intended to prevent companies and temporary workers from paying social security contributions in both countries for the same period.
The arrangement could reduce employment costs for Indian businesses sending workers to the U.K., particularly companies operating in information technology, professional services and other sectors that depend on temporary international assignments.
The exemption does not create a new immigration route or alter existing visa requirements. Instead, it applies to eligible workers who are already authorized to work temporarily in the U.K.
By reducing duplicate contributions, the convention could strengthen the competitiveness of Indian service providers and make temporary assignments more financially viable for employees and businesses.
The mobility provisions are among the wider elements of the trade agreement intended to support cross-border business activity without establishing unrestricted movement between the two countries.
Bilateral trade expands
India exported $13.44 billion worth of goods to the U.K. during the 2025–2026 financial year while importing goods valued at $11.68 billion.
Bilateral services trade reached $35.44 billion in 2024, with India recording a services surplus of almost $7.9 billion, according to Indian government figures cited by Reuters.
The agreement also opens government procurement opportunities in both markets. Indian suppliers will gain access to an estimated GBP90 billion segment of the U.K.’s public procurement market, while British companies will receive reciprocal access to Indian procurement opportunities valued at approximately $114 billion.
The deal was formally signed on July 24, 2025, after India and the U.K. announced the conclusion of negotiations in May of that year. Negotiations had originally begun in January 2022 and continued through several rounds before the two governments reached an agreement.
At the time of signing, the U.K. government estimated that the agreement could increase annual bilateral trade by GBP25.5 billion in the long term and add GBP4.8 billion to the U.K. economy each year.
Competition and growth
For Indian exporters, the immediate tariff removal could narrow the competitive gap with suppliers from countries that already had preferential access to the U.K.
The benefits may be particularly important for micro, small and medium-sized enterprises, which are often more exposed to tariffs and compliance costs than larger exporters. Lower duties could allow these companies to offer more competitive prices while expanding into a major developed market.
Indian engineering exports to the U.K. are expected to exceed $7.5 billion by the 2029–2030 financial year as the agreement encourages greater trade in machinery, equipment and manufactured products.
However, businesses will still need to satisfy product standards, certification requirements and rules of origin to qualify for preferential tariffs. The removal of customs duties does not eliminate regulatory requirements governing goods entering either market.
The implementation phase will therefore depend on how effectively governments, customs authorities and businesses translate the agreement’s provisions into practical commercial opportunities.
The pact marks a significant expansion of India–U.K. economic relations, combining tariff liberalization with services access, professional mobility, public procurement and social security coordination.
