India-UK Free Trade Agreement: Tariff Reductions Insufficient for Export Growth, Says GTRI
India’s upcoming Comprehensive Economic and Trade Agreement (CETA) with the UK, effective July 15, is set to enhance market access for Indian exporters. However, the Global Trade Research Initiative (GTRI) warns that mere tariff reductions will not suffice to unlock the full potential of this agreement. The think tank emphasizes the need for India to bolster its quality standards, certification systems, logistics, and buyer networks to fully capitalize on the trade pact.
GTRI’s Insights on Export Competitiveness
The CETA is expected to lower tariffs on various products, but GTRI asserts that Indian businesses must meet the UK’s regulatory and quality standards to reap the benefits. Ajay Srivastava, GTRI’s founder, stated, “Without parallel work on standards, certification, logistics, regulatory approvals and buyer networks, much of the opportunity will remain on paper.” He highlighted that export competitiveness will vary by sector, with food exporters facing stringent UK food safety and traceability norms, while engineering and electronics manufacturers will require globally accepted certifications.
The report identifies significant opportunities in sectors where India has a robust manufacturing base and the UK has high import demand. Srivastava noted that the most substantial gains are likely in garments, textiles, leather, footwear, processed foods, seafood, and selected farm products. He pointed out that Britain’s imports reached $928.9 billion in 2025, but only $15.2 billion came from India, translating to a mere 1.6% market share for Indian goods.
Challenges and Opportunities Ahead
GTRI cautions against assuming that a low market share automatically indicates high export potential. Srivastava explained that export potential hinges on four factors: UK demand, India’s export capacity, its existing market presence in the UK, and the tariff advantages created by CETA. He emphasized that standards, food-safety regulations, and supply-chain constraints are as critical as tariffs.
The think tank identified labor-intensive sectors such as garments, textiles, leather products, and processed food as likely beneficiaries of the agreement. It also sees potential in automobiles, motorcycles, and selected engineering products. Notably, while the UK imported processed food worth $33.4 billion last year, India contributed only $354 million, capturing just 1.1% of that market. GTRI highlighted that strong UK demand and low Indian penetration in ready-to-eat foods and ethnic products create significant opportunities, although compliance with food safety and labeling regulations will be essential.
While CETA may improve prospects for automobiles and auto components, GTRI noted that adherence to rules of origin and technical regulations will be crucial for maximizing gains. Conversely, sectors such as chemicals and pharmaceuticals may not benefit significantly from tariff concessions due to the importance of regulatory approvals and quality standards. The report also flagged challenges for steel exports, citing the UK’s safeguard measures and high tariffs, which could diminish the advantages of the trade agreement.
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