India–UK CETA Signed: A New Era of Post-Brexit Trade & MSME Growth

On 24 July 2025, India and the United Kingdom formally signed the Comprehensive Economic and Trade Agreement (CETA) in London marking the most sweeping bilateral trade pact either country has negotiated in years. Finalised after over three years of negotiations and announced in principle on 6 May 2025, the agreement represents a pivotal moment in post‑Brexit reorientation and India’s evolving trade strategy.

Broad Sweep of the Deal

CETA covers 26 chapters, including trade in goods and services, digital commerce, public procurement, intellectual property, labour mobility, and environmental and anti‑corruption standards. Notably:

India will eliminate tariffs on 99% of its exports to the UK, spanning labour‑intensive sectors such as textiles, leather, gems, and machinery.
The UK will cut tariffs on about 90% of Indian imports, including halving duties on whisky and gin from 150% to 75%, eventually down to 40% over a decade, and reducing auto tariffs from over 100% to 10% under quota lines.

Economic Gains & Forecasted Boosts

For the UK, government estimates foresee:

£25.5 billion per year in added trade volume, along with a £4.8 billion boost to UK GDP and £2.2 billion in wage gains annually.

For India, the agreement is expected to open a $23 billion trade corridor and almost double bilateral trade to $120 billion by 2030. In 2024, total trade stood at roughly $20–21 billion, underscoring the scale of the ambition.

SMEs and State‑level Benefits

Micro, small and medium enterprises (MSMEs) stand to gain significantly. Duty‑free access for textile, footwear, carpet, automobile parts, and fresh fruit exports worth $6.5 billion in FY25 will elevate India’s MSME exports. Key states set to benefit include:

Tamil Nadu: textiles, leather
Maharashtra and Gujarat: engineering goods, pharmaceuticals, seafood
Karnataka, Andhra Pradesh, Punjab: pharmaceuticals, IT and other services

Financial analysts foresee export growth in textiles by 30–45% and increased competitiveness in engineered goods, chemicals and plastics by 2029–30 for India.

Labour, Services & Mobility

CETA facilitates submission-friendly labour mobility through categories like Contractual Service Suppliers (CSS) and Independent Professionals (IP)—covering IT specialists, chefs, yoga teachers, artists, and more. A Double Contribution Social Security Convention allows temporary workers (up to three-year assignments) to avoid dual contributions, boosting fellow remittances and reducing costs.

Key Safeguards & Remaining Frictions

While broad in scope, the treaty preserves India’s safeguards on sensitive sectors: agriculture, dairy, grains, and select industrial items like diamonds, optical fibre and vehicles remain outside tariff liberalisation or are subject to quota controls.

Some unresolved issues include:

A bilateral investment treaty (BIT) with post‑termination protections (sunset clauses) and tax dispute exclusions remains under negotiation.
The UK’s carbon border adjustment mechanism is strongly opposed by India and is not yet reconciled within this framework.
Critics have flagged gaps around binding labour, environmental, and public health safeguards, and limited openings in legal and financial services for the UK.

Strategic and Political Significance

This treaty marks India’s first comprehensive FTA with a P5 nation and the UK’s most important post‑Brexit trade partner deal since leaving the EU. It signals India’s transition from cautious protectionism toward bold, globally integrated trade policymaking—a template for negotiating future deals with the EU and the U.S.

For the UK, the pact represents a crucial link to emerging markets, resilience in supply chains, and growth prospects in a shifting global order.

Timeline & Next Steps

Signed: 24 July 2025
Legal scrubbing completed in tandem with cabinet approvals in both nations over late July 2025.
Pending approvals: India’s Union Cabinet clearance (granted 22 July 2025) and UK parliamentary ratification.
Expected timeline: 6–12 months in the UK, 9–15 months overall before full implementation.

Sources:

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