India-UK CETA: Big Boost For MSME Exports

Indian micro, small, and medium enterprises (MSMEs), which form the backbone of our industry, stand to gain the most from the terms of trade and improved access to UK markets.

For Indian investors and traders, tariff elimination for textiles, apparel, gems, jewellery, leather, machinery, auto parts, pharma, agri-products, chemicals, processed foods, and marine products under the CETA is the big takeaway.

This is expected to result in 20-40 per cent rise in exports in key sectors from India to UK. There will be zero or reduced tariffs for 99 per cent of Indian exports to the UK.

Sectors, Clusters Expected To See Export Boost

Exports are expected to be boosted from leading manufacturing clusters in Tirupur, Surat, Ludhiana, Pune and Chennai, among others. Besides, several MSME clusters in cities in West Bengal and Assam will also benefit.

Take, for instance, the case of the leather and footwear industry. Tariffs have come down from 16 per cent to zero. Similarly, there will be duty-free access for gem and jewellery makers too.

Make-in-India medical devices will also attract no duty. Exports of surgical instruments, diagnostic equipment, ECG machines, and x-ray systems will gain momentum. There will also be zero duty market access for Indian generic drugs.

The CETA covers 95 per cent of Indian agricultural exports under the duty-free tariff line, which will boost exports of basmati rice, spices, tea, seafood, and packaged foods. Larger consignments of outbound shipments for Darjeeling tea and South Indian coffee are expected. Indian fishermen will also have greater opportunities to export to the UK’s US$ 5.4 billion marine products market.

Beyond reducing tariffs, the CETA facilitates smoother customs processes, enhances mobility, and creates new opportunities in government procurement and digital trade. Under the agreement, both countries have committed to transparent and efficient customs procedures.

New Visa Rules: The Game Changer

The Social Security Convention — allowing employees seconded for up to three years to contribute only to their home country’s social security — is another big win. This is expected to lead to significant cost savings for Indian firms in sectors like IT, pharmaceuticals, and consulting that send employees to the UK.

The CETA maintains access for Indians under the UK’s existing business mobility routes, such as short-term business visitors, intra-corporate transferees (ICTs), contractual service suppliers, and independent professionals.

It also aims to put in place a new visa mechanism that will allow 1,800 Indian professionals annually — chefs, yoga instructors, and Indian classical musicians — to work in the UK’s cultural and wellness sectors. These can be contractual or self-employed to fill the void in skill shortages in these sectors.

Independent professionals and service providers in fields like IT, engineering, and architecture will now be allowed to work in the UK for up to 12 months, provided they meet the UK's immigration requirements.