India-UK trade deal: Key gains and what it means

The India-UK Comprehensive Economic and Trade Agreement (CETA) took effect on July 15, eliminating tariffs on 99.5% of trade value between the two nations. The deal, signed a year prior, also introduces the Double Contribution Convention (DCC), providing social security relief for Indian workers in the UK.

Tariff reductions and trade coverage

The UK will immediately remove tariffs on 96.8% of its tariff lines, covering 97.7% of trade value. An additional 2% of tariff lines, accounting for 1.8% of trade value, will see reduced rates under quota systems. In total, 98.8% of tariff lines and 99.5% of trade value are now duty-free or reduced.

India will eliminate tariffs on 30.3% of trade value immediately, with 47% more phased out over time. Another 12.1% will face reduced quota-based tariffs, covering 89.5% of tariff lines and 89.4% of trade value.

Social security relief for Indian workers

Under the DCC, Indian workers in the UK and their employers will no longer pay UK social security contributions if they are already paying in India. Initially set for three years, this relief was extended to five years, benefiting roughly 75,000 workers and 900 employers. The change addresses a prior issue where workers paid into UK social security but could not access benefits before returning to India.

Sector-specific gains

The CETA includes provisions for services, a critical sector for India. UK firms will gain access to Indian markets in accounting, auditing, financial services, and telecom, while Indian companies can establish commercial presence in the UK for computer services, consultancy, and environmental services.

Automobile tariffs are also reduced, with 20,000 UK passenger vehicles allowed at 30-50% concessional rates in the first year, rising to 37,000 by year five. Tariffs on these vehicles will drop to 10% by year five. Separate quotas apply to alternative fuel and commercial vehicles.

Government procurement is another focus: UK firms can now bid on Indian central government tenders as Class-II local suppliers, while Indian suppliers retain Class-I preference in the UK. The UK market access is limited to non-sensitive central entities, excluding PSUs and state/local procurement.