How India-UK Relations Are Shaping Trade Opportunities in 2026
India-UK trade relations in 2026 are at an inflection point — and if you are a UK business sourcing from India, the decisions you make now will directly affect your landed costs and supply chain structure for the next decade. The india uk trade relations 2026 opportunities conversation centres on one agreement: the Comprehensive Economic and Trade Agreement (CETA), signed in July 2025 and currently working through its final implementation steps. But CETA is not the whole picture. There are tariff gaps, a new carbon levy on the horizon, and sector-specific nuances that matter for anyone buying from India today. This post sets out the current state clearly — what has changed, what has not, and what UK importers should be doing about it.
Quick Answer
The India-UK CETA was signed in July 2025 and scrutinised by Parliament in early 2026, but it is not yet in force as of June 2026. Once implemented, it will give 99% of Indian goods duty-free access to the UK market. UK businesses sourcing from India should monitor implementation progress, confirm current applicable duty rates with their customs broker, and prepare for CETA’s tariff benefits to take effect later in 2026.
The India-UK CETA — Signed, Scrutinised, Not Yet in Force
The India-UK Comprehensive Economic and Trade Agreement was signed on 24 July 2025 — the culmination of negotiations that started in 2022 and resumed after a pause during the UK election cycle. The UK Parliament scrutinised the agreement in early 2026, with a House of Commons debate on 9 February. As of June 2026, both governments are working through the remaining sticking points — primarily around UK steel safeguard measures and the upcoming UK Carbon Border Adjustment Mechanism — before the agreement formally enters into force.
India’s Commerce Secretary Rajesh Agrawal met UK Permanent Secretary Amanda Brooks on 3 June 2026 specifically to review CETA implementation progress and work through the outstanding issues. Both sides remain committed to the agreement. The delay is procedural and political — not a signal that the deal is at risk. UK importers should treat implementation as imminent rather than uncertain.
What CETA Delivers When It Takes Effect
The headline numbers are significant. India will eliminate tariffs on 99% of its tariff lines covering nearly the entire UK export basket — phased over varying timelines depending on the product category. The UK, in turn, has agreed to zero-rated access for 99% of Indian goods entering the UK market. For UK businesses importing from India, this is the more immediately relevant side of the equation.
The UK Government estimates duty savings for UK exporters of approximately £400 million at entry into force, rising to £900 million after ten years. But for UK importers — businesses buying from India — the benefit is on the Indian export side: near-total duty elimination on Indian goods entering the UK. For sectors where Indian import duty was previously applicable, this changes the landed cost calculation materially.
The DCTS Gap — A Real Risk for UK Importers Right Now
There is a practical complication that affects UK businesses importing from India today, before CETA enters into force. From 1 January 2026, the UK’s Developing Countries Trading Scheme (DCTS) — the post-Brexit preferential tariff arrangement that replaced the EU’s GSP scheme — suspended preferential duty rates on several Indian product categories. HMRC assessed that certain Indian sectors, including textiles, chemicals, and articles of iron and steel, had developed sufficiently to no longer require preferential access under DCTS.
This created a gap period: DCTS preferential rates removed from January 2026, and CETA not yet in force to replace them. During this gap, affected goods from India face standard UK Most Favoured Nation (MFN) tariff rates rather than the lower preferential rates that previously applied. For UK importers in the affected categories, this means higher import duty costs on India-origin goods until CETA takes effect.
What This Means in Practice
If your business sources goods from India that fall into the affected DCTS categories — textiles, certain chemicals, or iron and steel products — your customs broker should already have flagged the change and recalculated your duty liability at current MFN rates. If this has not been reviewed since January 2026, it needs to be. The DCTS graduation is not theoretical: higher duties are already being applied at UK port of entry on affected categories. When CETA enters into force, most of these will revert to zero or near-zero duty — but that benefit is not yet live.
Which Sectors Gain Most From CETA for UK Importers
The sectors that benefit most from the Indian export side of CETA — goods entering the UK from India — are those where UK MFN tariffs previously applied and where Indian goods are competitive at scale. Several categories are worth understanding in detail.
Textiles, Apparel, and Leather
Indian textiles and apparel gain immediate duty-free access to the UK under CETA — a significant shift given that this is one of India’s largest export categories and one where UK importers have historically paid tariffs of up to 12% on finished goods. For UK fashion retailers, distributors, and wholesale buyers sourcing Indian-made goods, the landed cost reduction is direct. Combined with India’s established manufacturing capacity and the quality improvement trajectory in Indian garment production, this makes the India sourcing case stronger in 2026 than it has been at any previous point.
Gems, Jewellery, and Engineered Goods
Gems and jewellery — a major Indian export category — along with engineering goods and auto components gain access under the near-total tariff elimination schedule. UK importers in these sectors gain cost advantage relative to sourcing from countries not covered by a UK FTA. India’s engineering manufacturing base, particularly in Karnataka, Gujarat, and Maharashtra, has developed significantly over the past decade and now produces to tolerances and certifications acceptable to European industrial buyers.
Natural Stone and Building Materials
India is one of the world’s largest producers of natural stone — granite, marble, and sandstone — with major quarrying and processing operations concentrated in Karnataka, Andhra Pradesh, Rajasthan, and Tamil Nadu. Under CETA’s near-total tariff elimination schedule on Indian goods, natural stone entering the UK from India benefits from the same access framework as the broader Indian goods basket. For UK buyers in construction, architectural, and memorial stone — a category that has historically relied on Indian granite as a primary supply source — the CETA framework reinforces the commercial logic of India sourcing. NexaCrest’s specialist divisions operate specifically within this India-to-UK supply corridor.
The UK Carbon Border Adjustment Mechanism — Plan for 2027
CETA is not the only policy development UK importers from India need to track. The UK Carbon Border Adjustment Mechanism (CBAM) is scheduled to come into force in 2027. It will impose a carbon-based levy on imports of iron and steel, aluminium, fertiliser, cement, hydrogen, ceramics, and glass — based on the embedded carbon emissions of those goods relative to UK production.
According to analysis from the Global Trade Research Initiative, Indian exports worth approximately USD 775 million could face additional costs under UK CBAM once the mechanism takes effect. For UK businesses sourcing these specific categories from India, the CBAM represents a future cost that needs to be factored into sourcing economics now — even though it does not apply yet.
What Importers Should Do Before 2027
The practical steps are straightforward. Request carbon intensity data from your Indian suppliers for any products in the CBAM-covered categories. Understand whether your supplier’s manufacturing process has documentation that would support a lower embedded carbon calculation. Start including CBAM-readiness as a supplier qualification criterion for new sourcing relationships in affected categories. The businesses that treat UK CBAM as a 2027 problem will face a rushed adjustment. Those who begin the data collection and supplier engagement process in 2026 will have accurate cost projections and compliant supply chains when the mechanism activates.
The Broader India-UK Trade Picture
Beyond the CETA and CBAM, the India-UK trading relationship in 2026 rests on a foundation of genuine scale. UK imports from India stood at £28 billion in the year to September 2025 — 3% of total UK imports — making India a significant but not dominant source market with considerable headroom for growth. The bilateral trade target set under CETA is to double trade to USD 112 billion from its current base of USD 56 billion, with a 2030 target date.
The Indian diaspora in the UK — the largest of any non-EU nationality — provides a structural foundation for business relationships that goes beyond formal trade policy. Shared legal frameworks, English-language business communication, and established professional services networks in both countries make the operational side of India sourcing more straightforward than sourcing from markets where these foundations do not exist.
Non-Tariff Barriers Remain a Reality
The honest picture also includes the challenges. India’s non-tariff barriers — regulatory opacity in certain sectors, state-level policy variations, complex goods inspection requirements, and expanding Quality Control Orders that mandate domestic standards for imported goods — remain a practical reality for UK businesses operating in the Indian market on the export side. For UK importers buying from India, the more relevant friction points are supplier-side: documentation accuracy, consistency of product specification across orders, and supply chain accountability. These are structural challenges in the India export ecosystem that a well-designed supplier relationship and governance framework addresses directly — and that CETA, as a tariff agreement, does not resolve on its own.
Frequently Asked Questions
Is the India-UK CETA in force yet as of June 2026?
No. The India-UK Comprehensive Economic and Trade Agreement was signed on 24 July 2025 and scrutinised by UK Parliament in early 2026, but it is not yet formally in force as of June 2026. Both governments are working through outstanding implementation issues — primarily related to UK steel safeguard measures — before the agreement enters into effect. UK importers should monitor announcements from the Department for Business and Trade and confirm current duty rates with their customs broker while the gap period continues.
What duty rates apply to Indian goods entering the UK right now, before CETA takes effect?
Standard UK Most Favoured Nation (MFN) tariff rates apply to most Indian goods. For goods previously covered by the UK’s Developing Countries Trading Scheme (DCTS), note that DCTS preferential rates were suspended for several Indian product categories from 1 January 2026, meaning those categories now face full MFN rates. The specific categories affected include textiles, certain chemicals, and articles of iron and steel. Confirm the current applicable rate for your specific commodity code with your customs broker before importing.
Will CETA cover natural stone imports from India to the UK?
Yes. CETA’s near-total tariff elimination schedule covers 99% of Indian goods entering the UK market — including natural stone categories such as granite, marble, and sandstone. The UK’s existing MFN tariff on natural stone imports from India has generally been low or zero for many product codes, so the direct duty saving on stone may be limited. The broader significance is the long-term certainty CETA provides for India-UK sourcing relationships in sectors including stone, where India is a primary global supply source.
What is the UK CBAM and which Indian exports will it affect?
The UK Carbon Border Adjustment Mechanism is scheduled to take effect in 2027. It will impose a levy on imports of iron and steel, aluminium, fertiliser, cement, hydrogen, ceramics, and glass — calculated on the embedded carbon emissions of those goods. Indian exports in these categories worth an estimated USD 775 million could face additional costs under the mechanism. UK importers in the affected categories should begin collecting carbon intensity data from their Indian suppliers now, ahead of the 2027 implementation date.
If your business sources goods from India — or is evaluating India as a sourcing market — understanding the current trade framework is the foundation of a sound procurement strategy. NexaCrest’s operational model is built around giving UK buyers the accountability structure and documentation precision that makes India sourcing work consistently — not just on the first order. Visit our divisions page to see the categories we currently supply, or contact us directly to discuss your specific sourcing requirements.