India-UK FTA comes into effect: Zero-duty access for Indian textiles and apparel in the UK

The India–UK Comprehensive Economic and Trade Agreement (CETA) has officially come into effect, establishing an economic framework between the two countries. Operationalized on July 15, 2026, the bilateral trade deal seeks to reduce trade barriers, improve market access, and enhance professional mobility across major industrial sectors. Alongside the trade deal, a separate social security pact titled the Double Contribution Convention (DCC) has also become functional.

The agreement marks a significant turning point for international trade, providing zero-duty access for nearly 99 percent of exports from India into the UK market. Total merchandise trade between the two nations reached 25.12 billion dollars during the 2025–26 financial year.

The implementation of CETA is projected to stimulate growth in labour-intensive manufacturing sectors, offering competitive pricing advantages for Indian exporters.

Impact on textile and apparel sectors

The fashion and textile industries are poised to achieve major benefits from the tariff relaxations. The UK currently imports textiles and clothing valued at 28.8 billion dollars annually, with India serving as the fourth-largest supplier to the region. Under the provisions of the pact, zero-duty access has been granted across 1,143 textile tariff lines.

This regulatory change eliminates previous tariff disadvantages faced by Indian suppliers in comparison to duty-free competitors like Bangladesh, Pakistan, and Cambodia.

Key product categories set to gain commercial traction include ready-made garments, home textiles, cotton dresses, blouses, and casual items such as cotton T-shirts.

Expansion in leather and footwear trade

The leather and footwear sectors are also expected to see heightened export volumes under the new guidelines. Prior to the agreement, Indian footwear exports faced UK import duties of up to 16 percent, which have now been reduced to zero. The trade deal opens up unrestricted access to the 8.9 billion dollar leather market of the UK.

Conservative industry estimates project that leather and footwear exports from India to the UK could exceed 900 million dollars in the coming years. The primary production hubs driving this expansion include major leather clusters situated across Uttar Pradesh, Tamil Nadu, West Bengal, and the Delhi National Capital Region.

The tariff exemptions are expected to strengthen the competitive position of the country against alternative manufacturing hubs, including Vietnam and Indonesia.

Relaxations for gems and jewellery

The luxury sector will experience structural shifts as traditional craftsmen and manufacturers receive tariff relaxations. Gems and jewellery exports from India to the UK are valued at 1.03 billion dollars, within an overall annual UK import market of approximately four billion dollars.

The reduction of import duties is projected to double the value of gems and jewellery trade between the two nations within the next two to three years. Major industrial clusters located in cities such as Surat, Mumbai, Jaipur, and Kolkata are slated to benefit from the increased export demand.

Professional mobility and services trade

The services sector, which recorded a bilateral trade value of 35.44 billion dollars in 2024, receives extensive commitments under the new architecture. The UK has agreed to eliminate numerical restrictions and the economic needs test for incoming professionals. Furthermore, mutual recognition agreements for professional qualifications will be pursued within 12 months.

Under the simultaneously enacted DCC, dual social security contributions are eliminated for short-term corporate assignments lasting up to 60 months. Previously, professionals contributed nearly 23 percent of salaries to the national insurance system of the UK without receiving reciprocal benefits.

The elimination of these duplicate payments is estimated to save businesses and professionals more than 600 million dollars annually.