India-UK trade deal: Indian exports rise 8%, imports fall 17% in first 2 months

The India-UK CETA changed the early pattern of merchandise trade after becoming operational on July 15, 2026. In the first two full months, India sold more goods to the UK, while buying fewer British goods. This matters because the agreement aims to make trade easier by reducing tariffs and simplifying market access.

Indian merchandise exports rose 8% year on year to $2.43 billion across August and September. Imports from the UK fell 16.8% to $1.36 billion. Monthly results varied: exports grew over 10% in August and about 5.5% in September, while British imports surged in August before falling sharply in September.

The early figures show a positive but incomplete response to CETA. Officials and trade experts said businesses were still preparing to use the agreement fully. They also noted that September’s import decline was partly linked to lower silver imports. More detailed analysis will require delayed commodity-level data.

The India-UK Comprehensive Economic and Trade Agreement, or CETA, is a bilateral trade agreement between India and the United Kingdom. It reduces or removes tariffs on goods and includes wider measures for services, professional mobility, and simpler rules of origin. It matters because lower barriers can make cross-border trade easier for businesses.

For Indian exporters, CETA provides zero-duty access for nearly 99% of exports, covering almost 100% of trade value. For Britain, it removes or reduces tariffs on 90% of tariff lines, covering about 92% of India’s goods imports from the UK. It also creates quotas for some high-value British products.

The agreement was operationalised on July 15, 2026. The first complete months for measuring its effect were August and September. Officials and trade experts cautioned that both economies were still adapting, so the early trade figures may not show CETA’s full potential.

In August and September 2026, India’s merchandise exports to the UK reached $2.43 billion. That was an 8% increase from the same two-month period a year earlier. India’s goods imports from Britain totalled $1.36 billion, a 16.8% decline year on year.

The monthly figures reveal a mixed but improving export picture. Exports fell about 4.2% in July, then rose more than 10% to $1.26 billion in August and about 5.5% to $1.17 billion in September. UK imports rose 24% to $733 million in August, after increasing nearly 12% in July, but dropped 40% to $630 million in September.

The figures cover the first two full months after CETA began. They indicate stronger Indian sales but uneven British shipments. The article notes that detailed country-specific and commodity-level data arrive later, so the precise causes require further analysis.

CETA gives Indian exporters exceptionally broad access to the UK market. Nearly 99% of India’s exports can enter the UK at zero duty, and those products represent almost 100% of India’s trade value. This can reduce the tariff cost built into exported goods.

The arrangement also opens India’s market to British goods. Britain removes or reduces tariffs on 90% of its tariff lines, covering about 92% of India’s goods imports from the UK. Examples include whisky and gin tariffs falling from 150% to 75% initially and then 40% after staging. A car quota can reduce tariffs from up to 110% to 10%.

These percentages describe different sides of the agreement. India’s benefit is measured by exports receiving zero-duty access and their trade value. The UK’s benefit is measured by tariff lines and the share of Indian goods imports covered. Businesses may take time to use the provisions fully.

CETA is especially relevant for Indian industries that sell labour-intensive products abroad. The article lists textiles, leather goods, marine products, gems and jewellery, toys, engineering goods, chemicals, and auto components among the main beneficiaries. These sectors are important because they form a large group of Indian export products covered by the agreement.

The key mechanism is tariff removal. When eligible Indian goods enter Britain without import duty, exporters face a lower trade cost. They may then offer more competitive prices, retain more of the sale value, or expand shipments. CETA also includes simplified rules of origin, which can make it easier to prove that goods qualify for the agreement.

The likely gains are not yet fully visible. Exports rose 8% in the first two full months, but officials said traders were still preparing. The article expects both economies to realise more of CETA’s potential as businesses use its provisions.

The September fall does not necessarily mean British goods lost demand after CETA. Imports from the UK dropped 40% year on year to $630 million, compared with $1.05 billion in September 2025. The article specifically links the sharp decline partly to lower imports of precious metals such as silver.

Monthly trade can change because the mix of products changes. A large shipment of precious metals in one year can make the next year’s comparison look especially weak. The figures also show volatility: UK imports rose nearly 12% in July and more than 24% in August before the September fall.

The agreement’s import benefits may emerge later. CETA eases quotas for high-value goods such as automobiles and whiskies, which experts expect could support imports over time. A complete explanation requires country-specific, commodity-wise data, which the article says are released with a lag.

Tariffs are taxes imposed on goods crossing a country’s border. The source article discusses CETA’s tariff cuts but does not define tariffs; this explanation uses standard economic meaning. A tariff normally raises the cost of an imported product when it reaches the destination market.

Reducing a tariff lowers that additional cost. For example, CETA cuts Britain’s whisky and gin tariff from 150% to 75% at entry into force, with a planned reduction to 40% after staging. It also allows a quota that can reduce car tariffs from up to 110% to 10%. These changes can make imported goods cheaper or improve exporters’ margins.

Lower tariffs can strengthen competition and encourage more trade, but actual volumes depend on demand, supply, prices, quotas, and product conditions. India’s exports rose 8% in the first two full months, while UK imports fell 16.8%, showing that tariff changes do not determine every monthly result.