UK-India Trade Deal: What the New Agreement Means for UK Businesses

The Comprehensive Economic and Trade Agreement (CETA) between the United Kingdom and India came into force on the 15th July 2026, marking a significant milestone in the trading relationship between two of the world’s largest economies. The agreement provides UK exporters and importers with access to preferential tariff rates across a wide range of goods, creating substantial opportunities for businesses engaged in UK-India trade.

However, these benefits are not applied automatically. To take advantage of reduced or eliminated tariffs, businesses must understand and comply with the agreement’s requirements, particularly around customs procedures and rules of origin. Companies that act early and ensure they are prepared will be better positioned to improve competitiveness, reduce costs, and strengthen their presence in the Indian market.

Why the UK-India Agreement Matters
India is currently the world’s fifth-largest economy and is expected to maintain economic growth of more than 6% annually over the next five years. Trade between the UK and India is already growing rapidly, with total bilateral trade reaching £47.9 billion in the four quarters to Q4 2025, an increase of 10% compared with the previous year. UK exports to India accounted for £19.3 billion, representing growth of more than 15%.

The new agreement is intended to build on this momentum, with both governments aiming to double bilateral trade by 2030. For UK businesses, particularly small and medium-sized enterprises (SMEs), the agreement offers new opportunities to expand exports, improve supply chains and access one of the world’s fastest-growing consumer markets.

Key Tariff Benefits for UK Exporters
The UK-India CETA is widely regarded as the UK’s most ambitious bilateral trade agreement since leaving the European Union. Approximately 90% of Indian tariff lines are being opened to UK goods, with many duties removed immediately and others reduced gradually over periods of up to 15 years.

Some of the most significant changes include:
• Whisky and gin: Import duties reduced from 150% to 75% on entry into force, falling further to 40% over ten years.
• Lamb and cod: Immediate tariff-free access from day one.
• Chocolate, biscuits and soft drinks: Tariffs will be phased out over a ten-year period.
• Passenger vehicles: Duties of up to 110% will be reduced progressively over ten years for internal combustion engine vehicles.

These reductions have the potential to make UK products significantly more competitive in the Indian market, particularly in sectors where high tariffs have traditionally been a barrier to trade.

What UK Importers Need to Know
For businesses importing goods from India, the position is slightly more complex and often misunderstood.

The introduction of the CETA does not replace the UK’s Developing Countries Trading Scheme (DCTS). India continues to benefit from DCTS Standard Preferences, meaning that from 15th July 2026 both schemes operate in parallel. In many cases, importers will be able to choose the preference programme that offers the most favourable tariff treatment.

There is, however, an important exception. Since 1st January 2026, India has been excluded from DCTS preferences for certain product categories under the UK’s goods graduation mechanism.

These categories include:
• Textiles
• Clothing and apparel
• Leather products
• Selected chemical products

The suspension remains in place until 31st December 2028. For affected goods, the UK-India CETA provides a valuable alternative route to preferential tariff treatment that was previously unavailable under DCTS.

For products that have not been graduated, importers should compare the tariff rates available under both schemes before making a preference claim, as DCTS may still provide the same or better treatment during the early years of the CETA’s tariff reduction schedules.

Certain sensitive agricultural products remain outside the scope of the agreement and continue to attract standard import duties. These include products such as sugar, milled rice, pork, chicken and eggs.

UK Exporters: Register Before Using the Agreement
Businesses wishing to provide origin declarations under the UK-India CETA must first register with HMRC.

Registration is completed once and is free of charge, but it must be in place before issuing your first origin declaration. Without a valid declaration, Indian importers cannot claim the preferential tariff rates available under the agreement and will instead pay the standard Most Favoured Nation (MFN) duty rates.

HMRC opened registrations in January 2026. Businesses that have not yet registered should do so as soon as possible to avoid delays or lost opportunities.

Confirm That Your Goods Qualify as UK-Originating
Preferential tariffs are only available where goods meet the agreement’s rules of origin requirements.
In broad terms, goods must either:

• Be wholly obtained or produced in the UK;
• Be manufactured entirely from originating materials; or
• Undergo sufficient processing in the UK in accordance with the agreement’s product-specific rules.

The rules vary by commodity code and can be complex in practice. Businesses should carefully review the relevant product-specific rules and maintain appropriate supporting evidence. Incorrect origin claims can lead to customs authorities recovering unpaid duties, together with interest and potential penalties.

UK Importers: Identify the Best Preference Route
Before claiming a tariff preference on goods imported from India, businesses should consider the following:

Is the product covered by DCTS graduation?

Check the relevant commodity code on the UK Trade Tariff. If the DCTS preference line states “excluding India”, DCTS benefits are suspended for that product and the CETA will be the only available preferential trade route.

Have you compared the tariff rates?

If the product is not subject to graduation, both DCTS and CETA preferences may be available. As tariff reductions under the CETA are phased in over time, the DCTS rate may currently be equivalent to, or in some cases better than, the rate available under the new agreement.

Understanding which scheme offers the greatest benefit can help businesses minimise import costs and maximise the commercial value of their supply chains.