India–UK pact aims to double trade to $112 billion by 2030: Here's who will benefit, what will become cheaper & how it will change jobs?

India–UK signed a landmark Comprehensive Economic and Trade Agreement (CETA) in London on Thursday. The pact, aimed at doubling bilateral trade to USD 112 billion by 2030, was signed in the presence of Prime Minister Narendra Modi and UK Prime Minister Keir Starmer, marking a new chapter in economic cooperation.

Key Sectors to Benefit: From Textiles to Whiskey

The agreement is set to unlock new opportunities for labour-intensive sectors in India such as textiles, leather, marine products, toys, sports goods, and gems and jewellery. At the same time, British goods such as cars and whiskey are expected to become more affordable in the Indian market thanks to reduced tariffs.

According to the commerce ministry, the deal ensures duty-free access for 99% of Indian exports to the UK, covering nearly the entire trade basket. Fast-growing sectors like engineering goods, auto components, and organic chemicals are also poised to gain from the agreement.

Services Sector Gets a Big Push

India's booming services sector, which includes IT, financial, legal, educational, and professional services, will receive a significant boost under the agreement. The deal also promotes digital trade, opening avenues for cross-border tech collaboration.

Notably, Indian professionals working across services, including engineers, architects, chefs, yoga instructors, and musicians, will benefit from simplified visa processes and liberalised entry categories into the UK.

Relief on Social Security: Double Contribution Convention

India has secured a major win with the agreement on the Double Contribution Convention, which will exempt Indian professionals and their employers from UK social security contributions for up to three years. This move is expected to enhance the cost competitiveness of Indian talent in the British market.

Growing Trade Ties: A Look at the Numbers

• The current bilateral trade stands at around USD 56 billion.
• India’s exports to the UK rose by 12.6% to USD 14.5 billion in 2024–25.
• Imports from the UK stood at USD 8.6 billion, growing at 2.3%.
• The trade balance remains in India’s favour.
• In 2023–24, overall bilateral trade reached USD 21.34 billion, up from USD 20.36 billion in 2022–23.

While the agreement has been signed, it still requires approval from the British Parliament, a process that could take up to a year. The successful conclusion of CETA negotiations was earlier announced on May 6, paving the way for this ambitious partnership.

Here are the key points of the agreement:

Tariff Cuts

• India will reduce tariffs on about 90% of UK goods.
• Whisky and gin duties will drop from 150% to 75%, then down to 40% over 10 years.
• Import tax on cars will fall from over 100% to 10%, but under a set limit (quota).
• Tariffs will also reduce on cosmetics, medical devices, salmon, chocolates, and biscuits.
• UK will give duty-free access to 99% of Indian goods, nearly 100% by trade value.
• India’s average tariff on UK goods will drop from 15% to 3%.
• Aerospace products will go from 11% duty to 0%.

Benefits for Indian Sectors

Zero-duty access for Indian exports like:

• Textiles
• Footwear
• Jewellery
• Furniture
• Auto parts
• Chemicals
• Machinery
• Sports goods
• Indian farmers will now have access to the UK’s £37.5 billion agricultural market.

Investments & Economic Impact

• Announcements of investments and exports worth nearly £6 billion.
• UK GDP expected to grow by £4.8 billion every year.
• UK shoppers may get cheaper Indian clothes, shoes, and food.

Major Business Deals

• Airbus & Rolls-Royce: Aircraft deals worth over £5 billion.
• Carbon Clean: Investing £7.6 million in Mumbai centre.
• Zerowatt Energy: Investing £10 million to open UK office.

Services & Visas

UK will allow temporary stays for Indian:

• Business visitors
• Chefs
• Yoga teachers
• Musicians
• 75,000 Indian workers will be exempt from social security payments in the UK for 3 years.

Public Procurement

• UK businesses can now bid for Indian government tenders (above Rs 2 billion).
• UK gets access to a market of 40,000 tenders worth £38 billion a year.

Indian Firms That Could Benefit

• Textile brands: Welspun, Arvind, Raymond, Vardhman.
• Footwear: Bata India, Relaxo.
• Automakers & suppliers: Tata Motors, Mahindra Electric, Bharat Forge.

UK Firms That Could Gain

• Whisky: Diageo.
• Cars: Aston Martin, Jaguar Land Rover (owned by Tata).
• They get easier entry into India’s large and growing market.

Strategic Moves

• Both countries to work together more closely on:
• Fighting crime
• Tackling illegal migration
• Sharing criminal records
• Some items like dairy, apples, and cooking oils are excluded from tariff cuts.

Inputs from PTI