UK-India Free Trade Agreement: what it means for SMEs

The UK’s new free trade agreement (FTA) with India came into force on 15 July 2026. Read our guide to how SMEs in the UK can benefit from the deal

UK businesses have traditionally faced considerable barriers to trading in India, due to high tariffs for goods and regulatory challenges for services.  

With that in mind, the Conservative Government under Boris Johnson began negotiations for a free trade agreement with India on 13 January 2022. The deal was eventually completed by Labour Prime Minister Keir Starmer’s government on 23 July 2025.  

The UK-India Comprehensive Economic and Trade Agreement (CETA), as it is formally known, came into force on 15 July 2026.  

The government, which describes the FTA as ‘India’s most comprehensive and the UK’s most ambitious trade deal’, estimates it will lead to an increase to UK GDP of 0.13% (£4.8 billion) in the long run, which is a bigger boost than the other post-Brexit FTAs negotiated from scratch (Australia, New Zealand, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership).  

UK exports to India are expected to increase by almost 60% in the long run, equivalent to an additional £15.7 billion of UK exports to India when applied to projections of future trade in 2040, and bilateral trade will rise by nearly 39% in the long run, equivalent to an annual £25.5 billion. 

Although the predicted impact on GDP is a very small proportion of the approximately £3 trillion that the UK economy is worth, India’s population of 1.45 billion people and the country being on track to become the world’s third-largest economy by 2028, means it provides potential big opportunities for UK businesses.  

6 key features of the UK-India FTA 

The agreement aims to reduce barriers to trade between the UK and India. Key details include:  

Reduced tariffs and customs duties 

The agreement significantly reduces tariffs and customs duties on most goods traded between the UK and India. 64% of UK goods receive duty-free access immediately, rising to 85% over 10 years.  

The government estimates that the agreement reduces tariffs on UK exports to India by up to £400 million initially, potentially increasing to £900 million after 10 years. 

Examples include: 

• tariffs on UK seafood exports, such as cod and salmon, cut from 33% to zero. 
• customs duties on UK exports of Scotch whisky and gin cut from 150% to 75% immediately, and then gradually to 40% over 10 years.  
• tariffs on agrifood products, including chocolate, biscuits, and soft drinks, gradually removed over 10 years. 
• tariffs on pharmaceuticals removed, with 87.6% getting duty‑free access immediately and the rest within five or 10 years. 
• tariffs on medical devices eliminated after 10 years, with phased tariff reductions for some sensitive items. 
• tariffs of 10%-20% on UK beauty and cosmetics exports removed or reduced in stages. 
• tariffs on UK internal combustion engine (ICE) vehicles falling from ~100%+ to 30-50% initially, and 10% from year five. 
• UK electric vehicle (EV)/hybrid/hydrogen passenger vehicles get access from year six, with tariffs reduced to 40-50% initially and 10% from year 10. 

Customs and trade facilitation 

There are measures in the deal to speed up customs processes.  

Agreements include Indian customs aiming to clear goods within 48 hours of arrival, and prioritising fast clearance of perishable goods to reduce spoilage and protect exporters of food, drink, medicines, and cosmetics. 

UK exporters can also request written decisions on tariffs and origin, with a response due within three months. 

Access to Indian government procurement 

The FTA allows eligible UK suppliers to bid for India’s central government contracts for goods and services. There are around 40,000 procurement opportunities each year valued at approximately £38 billion.  

Under India’s ‘Made in India’ policy, UK firms are treated as class 2 suppliers if at least 20% of their goods or services are from the UK. This gives them the same status as most Indian companies.  

Services  

Benefits in the FTA for services firms include: 

• UK firms are not required to have a local presence when establishing or providing services in India. 
• India must not discriminate against UK service providers, subject to their schedule of commitments. 

There is a specific chapter in the FTA for financial services.  

Business mobility 

The agreement has measures to make it easier for UK professionals to travel to India for business reasons.  

Efficiencies made to the visa process means UK professionals in sectors like engineering, architecture, accountancy, telecoms, insurance, and management consultancy can travel to India more easily for business, including attending conferences or providing services as self-employed individuals. 

Full details are here.  

Digital trading 

The FTA includes improvements and efficiencies for digital trade. Measures include: 

• digital trade documents are treated the same as paper versions to speed up trade and improve efficiency. 
• India will recognise UK e-contracts, digital signatures, and e-invoices to simplify cross-border trade. 
• if India offers better data rules to another trade partner, the UK can ask for the same. 
• UK businesses won’t be forced to share their source code when operating in India. 

Actions SMEs can take to benefit from the UK-India FTA 

Here are some steps UK businesses can take to benefit from the FTA. 

Register to complete rules of origin declarations 

To export goods to India under the reduced tariffs, they must meet the rules of origin.  

Under the FTA, the three main ways a good qualifies as originating under the agreement are: 

• wholly obtained or produced in the UK or India 
• made entirely from originating materials sourced from the UK or India. 
• produced using non-originating materials but meets product-specific rules. 

The agreement allows UK traders to self-declare origin instead of having to obtain an origin certificate from a ‘competent authority’ each time you send goods to India. You need to self-certify as exporters to India under the FTA by registering with HM Revenue & Customs. 

Access government support 

The government has provided detailed guidance to help businesses benefit from the trade agreement.   

There are guides to specific details as follows:  

• Government procurement 
• Rules of origin 
• Tariffs and customs 
• Trading good and services digitally in India 
• Travelling to India for work 

Sector-specific information is provided as follows:  

• Advanced manufacturing 
• Clean energy 
• Creative industries 
• Consumer and retail 
• Food and drink 
• Infrastructure 
• Life sciences 
• Professional and business services 
• Technology 

The government also has wider exporting support for businesses here and regular runs educational events here.

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