For years, a garment manufacturer in Tiruppur or a leather goods maker in Kanpur has watched competitors from Germany, Spain and the Netherlands walk into the British market with a built-in advantage. Those European exporters paid little to no duty on their goods entering the UK. Indian products, meanwhile, carried tariffs that made them costlier on the shelf, even when the quality matched or beat the competition.
That gap has just closed, at least on paper.
From July 15, the India-UK Comprehensive Economic and Trade Agreement (CETA) comes into effect. It gives 99% of Indian exports duty-free access to the British market. The deal was signed in London last year by Commerce and Industry Minister Piyush Goyal and his UK counterpart, in the presence of both countries’ prime ministers.
But its real impact is only being felt now, as tariffs actually start coming down.
Large Indian companies with deep pockets have long found ways to absorb tariff costs or set up local operations in the UK to sidestep them. It’s the smaller players who have struggled the most against tariff walls, textile units, leather workshops, marine exporters and food processors.
Goyal called the agreement a “triumph of economic statecraft.” He pointed out that duty-free access on 99% of tariff lines has dismantled long-standing barriers.
The government specifically named textiles, leather, marine products, engineering goods and processed food as sectors that will now compete without disadvantage. These are precisely the sectors where India’s exporter base is dominated by small and medium enterprises, not large conglomerates.
Mohit Singla, Chairman of the Trade Promotion Council of India, called the rollout a “historic milestone” for India’s export ecosystem. He noted that duty-free access would improve competitiveness across food processing, engineering, textiles and gems and jewellery. New provisions on services and digital trade also open fresh avenues for MSMEs to expand internationally.
The coffee example shows what’s possible
One of the clearest illustrations of this shift is instant coffee. India exports processed food products worth over $14 billion globally, and the UK alone imports more than $50 billion worth of such products.
Yet Indian goods currently make up a tiny sliver of that market, just over $300 million. With duty-free access now in place, Indian exporters can compete on equal terms with suppliers from Germany, Spain and the Netherlands, who previously had the tariff advantage.
The government expects agricultural and processed food exports to grow by more than 50% over the next three years.
The catch nobody’s talking about
It would be misleading to call this an unconditional win. While India secured duty-free access for 99% of its exports, it also opened up 89.5% of its own tariff lines to British goods. That’s a much larger share than the 24.5% of UK exports getting immediate duty-free entry into India.
New Delhi kept several sensitive sectors, including dairy, cereals, edible oils and smartphones, outside the deal to protect domestic industry.
There’s also a more sobering caveat worth flagging. Ajay Srivastava, founder of the Global Trade Research Initiative, has pointed out that the headline “99% duty-free access” figure needs context. More than half of India’s exports to the UK were already entering duty-free before CETA.
That means the actual incremental gain for exporters will vary considerably by sector. Small businesses shouldn’t expect an overnight transformation everywhere.
For sectors being pushed under Make in India and the Production-Linked Incentive scheme, tariff cuts on British goods will be phased in gradually over five, seven or even ten years. This gives Indian manufacturers time to adjust rather than face a sudden flood of cheaper imports.
Which states stand to gain
Because the benefiting sectors are concentrated in specific regions, the gains from this deal won’t be spread evenly. Tamil Nadu, Karnataka, Uttar Pradesh, Maharashtra and Gujarat, along with several northeastern states, are expected to see the most direct impact. This is thanks to their existing strength in textiles, engineering, marine exports, spices and processed food.
For an exporter in one of these states, this is a structural change rather than a temporary discount. It changes what’s possible, not just what’s affordable, at least in the sectors where the gains are real.
The real test is still ahead
Trade between India and the UK currently stands at around $56 billion. Both governments have set a target of doubling that figure by 2030.
Whether that number is realistic depends less on large corporations, who already have the resources to navigate international trade. It depends more on whether small and medium exporters can actually use this new access.
Duty-free entry removes one obstacle, but exporters will still need to meet UK quality standards, build distribution relationships, and compete on branding, not just price. The tariff wall is gone for most. What happens next is up to the exporters themselves.
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