Beyond Tariffs: How India-UK CETA Will Reshape Key Industries

Clearly, the government will now shift its focus to execution. The Central Board of Indirect Taxes and Customs (CBIC) has issued detailed operational guidelines for a new self-certification system for Rules of Origin—the mechanism that will determine whether exporters qualify for preferential tariff treatment under CETA.

Unlike previous free trade agreements that relied on certificates issued by designated export authorities, the India-UK pact introduces a self-declaration framework. Under the new system, UK exporters seeking preferential tariffs in India must electronically submit origin declarations that are authenticated by customs authorities in both countries before duty concessions can be claimed. CBIC said the new digital process is designed to prevent goods originating from third countries from accessing preferential tariffs by routing shipments through either India or the UK. Each declaration will remain valid for 12 months but will apply only to a single shipment.

The move underscores what trade experts say will be the defining challenge of the agreement: implementation. While CETA removes tariffs, businesses will have to navigate rules of origin, customs compliance, product standards and certification requirements to fully utilise the agreement.

Labour-Intensive Sectors

The largest beneficiaries are expected to be India's labour-intensive manufacturing sectors, which have historically faced tariff disadvantages in the British market. Textiles and apparel emerge among the biggest winners after tariffs of up to 12% were eliminated. The industry expects the agreement to significantly expand India's market share in Britain's apparel imports over the next three to five years by improving price competitiveness against suppliers from Bangladesh, Vietnam and Turkey.

The Confederation of Indian Industry (CII) described the agreement as a "historic milestone" that will strengthen bilateral trade and investment, while the Federation of Indian Chambers of Commerce and Industry (FICCI) called it a "landmark agreement" capable of translating years of negotiations into stronger exports, investment and industrial collaboration.

Leather Goods And Footwear 

Leather goods and footwear manufacturers also receive a substantial boost after duties of up to 16% were abolished, improving India's competitiveness in Britain's premium retail market.

Engineering Goods

Engineering goods, machinery, electrical equipment and auto components stand to gain from the elimination of tariffs of up to 18%. "The agreement provides Indian engineering exporters an opportunity to integrate more deeply into the UK's advanced manufacturing and aerospace value chains," EEPC India said, adding that zero-duty access would particularly benefit MSMEs supplying industrial machinery, fabricated metal products and electrical equipment.

According to EEPC, India’s engineering sector has emerged as one of the most competitive merchandise export segments over the last few years, accounting for more than one-fourth of the total goods exports from the country.

In 2025-26, Indian engineering exports touched US$ 122.43 billion registering a growth of about 75% from US$70 billion in FY 2014-15.

Marine Products And Processed Foods

This is another sector that is expected to witness one of the fastest export expansions after tariffs of up to 21.5% on seafood and as much as 70% on processed foods being eliminated. Exporters see growing opportunities for shrimp, ready-to-eat foods, spices, confectionery and ethnic food products, although success will depend on meeting Britain's stringent sanitary and phytosanitary standards.

Pharmaceuticals

The pharmaceuticals sector is set to gain significantly, The Pharmaceuticals Export Promotion Council of India (Pharmexcil) said the agreement would boost exports, investment, research and manufacturing collaboration. 

"The agreement's full benefits will depend on greater regulatory harmonisation, mutual recognition of quality standards and faster product approval pathways," said Uday Bhaskar, Director General of Pharmexcil, adding that these measures would strengthen India's position as a trusted supplier of affordable medicines to the UK's National Health Service (NHS).

However, the intellectual property chapter has drawn mixed reactions. While Indian manufacturers welcomed the retention of key public health safeguards, the Association of the British Pharmaceutical Industry (ABPI) said the agreement missed an opportunity to strengthen intellectual property protections. "It's disappointing that this deal seemingly won't support the UK's growth ambitions for pharmaceuticals," said ABPI Chief Executive Richard Torbett. Public health advocates also expressed concern. 

MSME Exports

Export promotion organisations believe the agreement creates an unprecedented opportunity but caution that tariff preferences alone will not deliver export growth.

Calling the agreement a "transformational moment" for Indian exporters, the Federation of Indian Export Organisations (FIEO) said CETA opens significant opportunities across engineering products, textiles, leather, food processing and MSME exports.

FIEO Director General Ajay Sahai urged exporters to "look beyond traditional buyers" and leverage digital commerce to expand into premium and niche UK markets, particularly in processed foods, organic products and specialised manufacturing.

Beyond merchandise exports, the agreement delivers one of Britain's most comprehensive market access commitments for Indian services. The UK has opened 137 services sub-sectors, covering information technology, financial services, healthcare, education, engineering, architecture, consultancy, telecommunications and professional services.

The accompanying Double Contribution Convention (DCC) removes one of the biggest cost burdens for Indian companies by exempting professionals on temporary assignments from paying dual social security contributions for up to five years.

According to the Commerce Ministry, the agreement is expected to benefit more than 75,000 Indian professionals and around 900 companies, particularly in IT, consulting, engineering and financial services.

UK Exporters

For British industry, CETA represents one of the UK's most significant post-Brexit trade agreements. The Scotch Whisky Association (SWA) described the agreement as "a major accomplishment" after India agreed to reduce import duties on Scotch whisky from 150% to 75% immediately, before lowering them to 40% over the next decade.

The association estimates exports could rise from around £250 million to £1 billion within five years, while drinks company Pernod Ricard called the agreement a "game changer" for premium spirits.

Britain's automotive industry also secured a significant breakthrough. The Society of Motor Manufacturers and Traders (SMMT) described the agreement as "a major milestone" because it provides British manufacturers with preferential access to India's premium passenger vehicle market for the first time through tariff-rate quotas.

Companies including Jaguar Land Rover see the agreement as establishing a long-term framework for expanding sales in one of the world's fastest-growing automobile markets.

British aerospace companies also benefit from phased elimination of tariffs on aircraft engines and components, while industrial manufacturers gain improved access for machinery, engineering equipment and recycled raw materials.

Sensitive Sectors

Despite broad market opening, India has retained protection for politically and economically sensitive sectors. Dairy products, cereals, millets, edible oils, oilseeds, apples and several vegetables remain outside the agreement, while strategic sectors such as telecom equipment, gold and aluminium scrap also remain excluded from tariff concessions.

Commerce and Industry Minister Piyush Goyal has described the agreement as "people-centric," saying it simultaneously expands export opportunities while protecting India's farmers and sensitive domestic industries.

Trade economists broadly describe CETA as balanced and strategically important, particularly as India seeks to diversify export markets amid growing global trade uncertainty. However, they caution that preferential tariffs are only one part of the equation.

The Global Trade Research Initiative (GTRI) says the strongest opportunities lie in garments, textiles, footwear, leather products, processed foods, seafood, machinery, electronics and engineering products because these combine India's export strengths with strong UK demand. However, it cautions that sectors such as steel, petroleum and alcohol face structural barriers that tariff reductions alone cannot overcome.

GTRI Founder Ajay Srivastava has also warned that Britain's proposed Carbon Border Adjustment Mechanism (CBAM) could erode some of the agreement's benefits if Indian carbon-intensive exports face additional levies despite enjoying preferential tariff treatment.

Similarly, PwC India says businesses will have to redesign supply chains, strengthen customs compliance, comply with rules of origin and invest in certification to fully capture the agreement's benefits.

With CBIC's digital origin verification system now in place, attention shifts from the negotiating table to factory floors, customs checkpoints and boardrooms. The agreement has removed tariff barriers across much of bilateral trade. Whether it delivers the projected doubling of trade by 2030 will now depend on how effectively exporters, manufacturers and service providers convert preferential market access into sustained commercial gains.