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For UK businesses, entering India means working through unfamiliar laws, taxes, setup costs, and economic complexity — but the rewards can be worth it.
Breaking into the Indian market has never been easy for UK businesses. High tariffs, unfamiliar rules, complex tax laws, and the cost of setting up have made it a tough market to crack — despite its huge potential.
That’s starting to change. The new UK-India Trade Agreement (CETA) cuts tariffs on UK goods, opens India’s services sector, and makes it easier for staff to move between the two countries — giving UK businesses a simpler, more affordable way in.
This guide breaks down what the agreement covers and how your business can make the most of it.
What is the UK-India Free Trade Agreement?
The India–UK Trade Agreement, legally known as the Comprehensive Economic and Trade Agreement (CETA), is an important step toward strengthening trade relations between the two countries.
This agreement brings India and the UK closer by reducing tariffs and improving market access for both nations. It allows businesses from both countries to access a wider range of goods and services in a more efficient and competitive way. Including lower tariffs and improved access to India – a developing country that is growing fast. Businesses will need to be careful to navigate the complex legal landscape that India offers but will also benefit from a more stable environment from which to invest and expand in the nation.
These also include provisions for improved market access for a variety of goods and services, customs procedures, government procurement, IP and digital trade, and other aspects. The deal, one of the most profitable of its kind signed by the UK, will deliver a more certain economic future for businesses. -The value of imports and exports between India and the UK will rise by some 25.5billion each year in the long term and boost GDP by 4.8billion every 12 months, according to the UK Government.
Let’s understand what this agreement majorly covers:
CETA enters into force on 15th July 2026, after fourteen negotiation rounds and signing in London on 24 July 2025.
- The agreement spans 30 chapters, covering digital trade, financial services, IP, government procurement, and sustainability.
- Tariffs on Indian exports like textiles, leather, marine products, and engineering goods will be eliminated, giving near-total (99%) duty-free access.
- The UK has opened 137 services sub-sectors, including IT, finance, HealthCare\re, and consultancy — a major win for UK service exporters.
- New mobility pathways make it easier for business visitors, professionals, and investors to move between the UK and India.
- A Double Contribution Convention lets workers skip dual social security payments for up to 5 years on temporary assignments.
- Steel trade protections ensure 85% of India’s steel exports stay clear of new UK steel measures.
- Sensitive Indian sectors like dairy, cereals, and edible oils remain protected from the deal.
- Government procurement access is opened for the first time, letting UK businesses bid on Indian public contracts.
How the UK-India Free Trade Agreement is Benefitting UK Businesses Entering India ?
UK businesses gain significant advantages through this FTA, which aims to facilitate and reduce the costs associated with entering the Indian market. Although the agreement does not avoid Indian laws, it helps to ease certain barriers that could potentially reduce expansion.
- Tariff Reductions on UK Exports: The FTA aims to reduce or remove existing tariffs from many UK goods. Nearly two-thirds (64%) of goods exported from the UK to India will now become duty-free upon entry into force, with a gradual reduction to 85% within a decade. These tariff reductions can reduce the price of goods and make British businesses more competitive within India.
- Enhanced Market Access: This agreement aims to create more simplified customs procedures and to promote greater transparency of the laws and procedures related to trade and investment. Reduced lead times and associated costs can now help improve the efficiency of goods movement.
- Expansion in High-Growth Sectors: It provides new business opportunities in a broad range of sector from ‘hi-tech’ through to finance, healthcare, manufacturing, renewables, education, Food and beverages and Professional services. This matches the general trends for the Indian econ omy in general, as well as government driven incentives through initiatives such as Make in India and Digital India.
- Greater Investor Confidence: By building stronger links, the FTA offer UK businesses increased confidence when making direct investments or establishing businesses in the form of a Wholly Owned Subsidiary, a Branch Office or a Joint Venture in India by establishing a more stable business environment.
How UK Businesses Can Get the Right Support
Despite the new trade deal between the UK and India, entering the Indian market has become more convenient. But it does not waive away all the legalities and regulations. UK-based businesses will need to follow several legal and compliance procedures and get their business registered in India before the start of operations.
The initial few steps of the business set-up involve:
- Choose the Right structure of the business, based on company goals: UK companies can opt to set up a Private Limited Company, Limited Liability Partnership (LLP), Wholly Owned Subsidiary, Liaison Office, Branch Office or Joint Venture. This choice dictates the tax, legal and compliance formalities for your company in India.
- Understanding Foreign Direct Investment (FDI) regulations: The Company Incorporation process, GST registration, tax compliance, employment laws, accounting norms and various industry-specific licensing regulations need to be strictly followed by companies entering India. Failing to adhere to them may cause disruptions, penalties, or operational impediments.
- Seeking Professional guidance from experienced advisors: Timely assistance by legal and compliance consultants helps to bypass these hassles.
Conclusion
The UK-India Free Trade Agreement represents an important advancement in strengthening the economic relationship between both nations. By removing barriers, enhancing market access and promoting investment, it provides the Indian market with the promise of new and exciting prospects for any UK businesses aiming to venture into it.
Despite a beneficial trade agreement, market access necessitates more than its existence – a comprehension of Indian regulatory structures, the optimum business framework and ensuring regulatory compliance are key to building a growing and resilient Entry in the marketplace. The UK’s ability to confidently capitalise upon the opportunities available in India rests upon accurate planning and obtaining professional advice.
How can Mercurius help?
Expanding into a new market can be complex, but you don’t have to navigate it alone. At Mercurius, we provide end-to-end support to UK businesses looking to establish and grow their presence in India.
Our experts assist with company incorporation, choosing the right business structure, FDI advisory, regulatory compliance, tax registrations, accounting, payroll, and ongoing business support. With extensive experience in helping international businesses enter the Indian market, we simplify the process and ensure your business remains fully compliant from day one.
If you’re planning to establish your business in India, partner with Mercurius and take the first step towards a smooth and successful expansion.
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