VOL. 18, ISSUE NO. 5 | August 2025
Spotlight
INTRODUCTION
The India–UK Comprehensive Economic and Trade Agreement (CETA) was signed on 24th July 2025, marking a significant milestone in bilateral trade relations. This agreement is designed to deepen economic ties,enhance market access, and promote strategic collaboration across sectors, especially engineering goods.For India, the engineering sector—one of the country’s most robust and export-oriented industries—stands to gain immensely from the CETA.
The CETA introduces comprehensive tariff liberalization, with zero-duty access granted to a wide range of Indian engineering products. The UK has offered Staging Category A for most engineering goods, meaning immediate tariff elimination. Select products, especially in the automotive sector, are subject to Tariff Rate Quotas (TRQs) and phased liberalization over 5–10 years.
The agreement also includes:
- Mutual recognition of standards for medical devices.
- A Defence Industrial Roadmap for aerospace and defence collaboration.
- Provisions to safeguard Indian interests in case of adverse effects from UK’s proposed Carbon Border Adjustment Mechanism (CBAM).
Key features of the FTA
- Immediate tariff elimination on a wide range of engineering goods, including iron & steel, electrical machinery, industrial equipment, and auto components.
- Zero-duty access for most engineering categories under Staging Category A.
- Tariff Rate Quotas (TRQs) applied selectively, especially in the automotive sector for electric and hybrid vehicles.
- Mutual recognition agreements for medical devices certified by Indian authorities.
- Launch of a Defence Industrial Roadmap to promote joint R&D and manufacturing in aerospace and defence.
A. Steel and steel products (HS Chapters 72–73)
- Tariffs on iron and steel products have been fully eliminated, benefiting India’s large MSME base.
- Exports to the UK in FY 2024–25 stood at USD 870 million.
- Products include semi-finished steel, cast iron articles, screws, nuts, bolts, and welded materials.
- With the United Kingdom’s import demand valued at USD 18.46 billion, India presently accounts for approximately 4% of this market. This relatively small share indicates considerable potential for expansion.
B. Non-ferrous metals (HS Chapters 74–81)
- Includes copper, aluminium, nickel, zinc, lead, and tin.
- All categories now face 0% tariffs, enhancing competitiveness.
- India’s exports to the UK are currently USD 150 million, just 1.4% of UK’s demand.
- UK imports over USD 11 billion worth of these metals annually.
- Focused investment and scaling could unlock USD 1.1–1.65 billion in exports.
C. Industrial and Electrical Machinery (HS Chapters 84–85)
- Full tariff elimination supports integration into UK’s advanced manufacturing supply chains.
- India’s exports to the UK in these categories total USD 3.1 billion, just 1.9% of UK’s USD 165 billion import demand.
- Key exports include turbojets, gears, motors, generators, optical fibres, and automation systems.
- Capturing 5–7% of UK’s market could contribute USD 8–11.5 billion.
D. Automotive Sector (HS Chapter 87)
- Conventional vehicles and auto components receive duty-free access.
- Electric and hybrid vehicles are under TRQs, with no concessions for the first 5 years.
- India’s exports include brakes, suspensions, gearboxes, tyres, and low-value auto parts.
- The FTA encourages joint ventures, technology transfer, and R&D in clean mobility.
- India has secured phased duty reductions over 5–10 years, protecting sensitive segments.
E. Aerospace and Defence (HS Chapters 88 & 93)
- Conventional vehicles and auto components receive duty-free access.
- Electric and hybrid vehicles are under TRQs, with no concessions for the first 5 years.
- India’s exports include brakes, suspensions, gearboxes, tyres, and low-value auto parts.
- The FTA encourages joint ventures, technology transfer, and R&D in clean mobility.
- India has secured phased duty reductions over 5–10 years, protecting sensitive segments.
E. Aerospace and Defence (HS Chapters 88 & 93)
- Full liberalization enables exports of aircraft components and defence products.
- The Defence Industrial Roadmap promotes joint manufacturing, technology transfer, and research.
- Supports India’s “Make in India” initiative and strategic autonomy in defence production.
F. Medical Devices and Instruments (HS Chapter 90)
- Zero tariffs on surgical and diagnostic equipment.
- Exports to the UK are USD 240 million, accounting for 1.7% of engineering exports.
- Includes X-ray systems, surgical instruments, and diagnostic tools.
- The FTA includes mutual recognition of Indian certifications (CDSCO, ICMED), easing market access.
G. Other Engineering Goods
- Categories like ships (HS 89), aircraft (HS 88), rail equipment (HS 86), tools (HS 82), and musical instruments (HS 92) now enjoy zero tariffs.
- UK demand in aircraft and precision instruments exceeds USD 35 billion, but India’s share is modest.
- Strategic scaling and targeted promotion can unlock USD 700M–1B in additional exports.
OVERVIEW OF UK’S TARIFF OFFER
Under the India–UK CETA, the UK has extended immediate tariff elimination (Staging Category A) across a wide range of engineering goods. This includes sectors such as:
- Iron and steel
- Non-ferrous metals
- Machinery and electrical equipment
- Automotive components
- Medical devices
- Aerospace and defence products
Selective use of Tariff Rate Quotas (TRQs) has been applied to sensitive automotive categories, particularly electric and hybrid vehicles. Details of tariff and trade mentioned in Annexure I.
EXPORT PROJECTIONS AND GROWTH POTENTIAL
The signing of the India–UK Comprehensive Economic and Trade Agreement (CETA) in July 2025 marks a transformative moment for India’s engineering export sector. With the UK offering immediate tariff elimination across most engineering categories, the agreement is expected to significantly boost India’s export volumes over the next five years.
Overall Export Growth Forecast
India’s engineering exports to the UK are projected to nearly double from USD 4 billion in FY 2024–25 to USD 7.55 billion by FY 2029–30. This growth trajectory aligns with India’s broader strategic goal of achieving USD 300 billion in engineering exports globally by 2030.
The projected growth is driven by:
- Zero-duty access across key engineering categories.
- Improved price competitiveness due to tariff elimination.
- Integration into UK’s advanced manufacturing supply chains.
- Expansion of MSME participation in global trade.
Table1: Key product-wise export projections (USD Million)
| Engineering Product Panels | 2024-25 | 2029-30 |
|---|---|---|
| Electric machinery and equipment | 1213.44 | 2282.8 |
| Iron and steel | 526.96 | 991.3 |
| Products of iron and steel | 341.15 | 641.8 |
| Other construction machinery | 234.48 | 441.1 |
| Other misc. Engineering items | 207.83 | 391.0 |
| IC engines and parts | 192.46 | 362.1 |
| Auto components/parts | 158.09 | 297.4 |
| Aircraft, spacecraft and parts | 154.86 | 291.3 |
| Industrial Machinery for dairy etc | 124.62 | 234.4 |
| Medical and scientific instruments | 103.43 | 194.6 |
| Other nonferrous metal and products | 103.31 | 194.4 |
| Aluminium, products of aluminium | 94.04 | 176.9 |
| Auto tyres and tubes | 93.89 | 176.6 |
| Engineering Product Panels | 2024-25 | 2029-30 |
|---|---|---|
| ATM, injecting moulding machinery etc | 89.59 | 168.5 |
| Cranes, lifts and winches | 59.95 | 112.8 |
| Other rubber product except footwear | 57.68 | 108.5 |
| Two and three wheelers | 50.03 | 94.1 |
| Pumps of all types | 44.16 | 83.1 |
| Copper and products made of copper | 35.81 | 67.4 |
| Hand tool, cutting tool of metals | 29.44 | 55.4 |
| AC, refrigeration machinery etc | 19.24 | 36.2 |
| Bicycle and parts | 19.10 | 35.9 |
| Nickel, product made of nickel | 19.05 | 35.8 |
| Machine tools | 15.96 | 30.0 |
| Others | 24.73 | 46.5 |
| ITC (HS) | Product description | AVG Tariff faced by India (2024) (Source: MacMap) |
Staging category | India's Export to UK (2022-24) | India's Global Export (2022-24) | Share in India's global export (%) | UK's Global Import (2022-24) | Share in UK's global imports |
|---|---|---|---|---|---|---|---|---|
| 72 | Iron and steel | 0 | A | 375.7 | 12451.3 | 3.0% | 7154.5 | 5.3% |
| 73 | Articles of iron or steel | 2 | A | 355.6 | 9910.1 | 3.6% | 11305.1 | 3.1% |
| 74 | Copper and articles thereof | 1 | A | 31.2 | 2005.6 | 1.6% | 2167.4 | 1.4% |
| 75 | Nickel and articles thereof | 0 | A | 18.1 | 185.6 | 9.8% | 1708.2 | 1.1% |
| 76 | Aluminium and articles thereof | 5 | A | 97.0 | 8098.2 | 1.2% | 6316.4 | 1.5% |
| 78 | Lead and articles thereof | 2 | A | 5.2 | 698.0 | 0.7% | 451.9 | 1.2% |
| 79 | Zinc and articles thereof | 3 | A | 5.0 | 984.6 | 0.5% | 302.7 | 1.6% |
| 80 | Tin and articles thereof | 0 | A | 0.7 | 17.3 | 4.2% | 133.7 | 0.5% |
| 81 | Other base metals; cermets; articles thereof | 4 | A | 2.2 | 122.0 | 1.8% | 1182.4 | 0.2% |
| 82 | Tools, implements, cutlery, spoons and forks, of base metal; parts thereof | 3 | A | 44.9 | 1106.4 | 4.1% | 1968.4 | 2.3% |
| 83 | Miscellaneous articles of base metal | 2 | A | 105.2 | 896.3 | 11.7% | 3114.4 | 3.4% |
| 84 | Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof | 0 | A | 1390.7 | 29773.8 | 4.7% | 94085.5 | 1.5% |
| 85 | Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories | 0 | A | 1717.8 | 33022.1 | 5.2% | 70997.6 | 2.4% |
| 86 | Railway or tramway locomotives, rolling stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electromechanical) traffic signalling equipment of all kinds | 0 | A | 5.0 | 358.5 | 1.4% | 1280.3 | 0.4% |
| 8701 | Tractors (other than tractors of heading 8709) | 10 | A | 8.6 | 1266.6 | 0.7% | 3072.8 | 0.3% |
| 8702 | Motor vehicles for the transport of >= 10 persons, incl. driver | 13 | A | 0.1 | 156.5 | 0.0% | 531.5 | 0.0% |
| 870310 | Vehicles for the transport of <10 persons on snow; golf cars and similar vehicles | 8 | A | 0.0 | 1.4 | 0.0% | 84.3 | 0.0% |
| 870321 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with only spark-ignition internal combustion reciprocating piston engine of a cylinder capacity <= 1.000 cm³ (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | 10 | A | 0.2 | 1366.1 | 0.0% | 5395.0 | 0.0% |
| 870322 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with only spark-ignition internal combustion reciprocating piston engine of a cylinder capacity > 1.000 cm³ but <= 1.500 cm³ (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | 10 | A | 0.3 | 4200.8 | 0.0% | 9131.7 | 0.0% |
| 870323 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with only spark-ignition internal combustion reciprocating piston engine of a cylinder capacity > 1.500 cm³ but <= 3.000 cm³ (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | 10 | A | 0.0 | 905.8 | 0.0% | 6546.1 | 0.0% |
| 870324 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with only spark-ignition internal combustion reciprocating piston engine of a cylinder capacity > 3.000 cm³ (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | 10 | A | 0.6 | 6.1 | 9.7% | 1516.5 | 0.0% |
| 870331 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with only diesel engine of a cylinder capacity <= 1.500 cm³ (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | 10 | A | 0.0 | 110.9 | 0.0% | 451.9 | 0.0% |
| 870332 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with only diesel engine of a cylinder capacity > 1.500 cm³ but <= 2.500 cm³ (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | 10 | A | 0.1 | 100.8 | 0.1% | 3500.5 | 0.0% |
| 870333 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with only diesel engine of a cylinder capacity > 2.500 cm³ (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | 10 | A | 0.0 | 10.3 | 0.0% | 1051.6 | 0.0% |
| 870340 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion (excl. vehicles for travelling on snow, other specially designed vehicles of subheading 8703.10 and plug-in hybrids) | 10 | TRQ | 0.0 | 2.3 | 1.2% | 5416.2 | 0.0% |
| 870350 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with both diesel engine and electric motor as motors for propulsion (excl. vehicles for travelling on snow, other specially designed vehicles of subheading 8703.10 and plug-in hybrids) | 10 | TRQ | 0.0 | 0.0 | 0.0% | 860.1 | 0.0% |
| 870360 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, capable of being charged by plugging to external source of electric power (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | 10 | TRQ | 0.0 | 0.3 | 0.0% | 4995.7 | 0.0% |
| 870370 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with both diesel engine and electric motor as motors for propulsion, capable of being charged by plugging to external source of electric power (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | TRQ | 0.0 | 0.0 | 0.0% | 58.7 | 0.0% | |
| 870380 | Motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with only electric motor for propulsion (excl. vehicles for travelling on snow and other specially designed vehicles of subheading 8703.10) | 10 | TRQ | 0.2 | 58.9 | 0.3% | 13502.1 | 0.0% |
| 870390 | Motor cars and other vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, with engines other than internal combustion piston engine or electric motor (excl. vehicles for the transport of persons on snow and other specially designed vehicles of subheading 8703.10) | 10 | TRQ | 0.2 | 1.5 | 13.1% | 27.7 | 0.7% |
| 8704 | Motor vehicles for the transport of goods, incl. chassis with engine and cab | 14 | A | 3.3 | 1601.6 | 0.2% | 10513.7 | 0.0% |
| 8705 | Special purpose motor vehicles (other than those principally designed for the transport of persons or goods), e.g. breakdown lorries, crane lorries, fire fighting vehicles, concrete-mixer lorries, road sweeper lorries, spraying lorries, mobile workshops and mobile radiological units | 4 | A | 0.0 | 51.1 | 0.0% | 264.7 | 0.0% |
| 8706 | Chassis fitted with engines, for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705 (excl. those with engines and cabs) | 10 | A | 0.5 | 268.2 | 0.2% | 110.3 | 0.4% |
| 8707 | Bodies, incl. cabs, for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705 | 5 | A | 0.0 | 36.2 | 0.0% | 586.8 | 0.0% |
| 8708 | Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s. | 4 | A | 175.1 | 7079.0 | 2.5% | 12418.1 | 1.4% |
| 8709 | Works trucks, self-propelled, not fitted with lifting or handling equipment, of the type used in factories, warehouses, dock areas or airports for short distance transport of goods; tractors of the type used on railway station platforms; parts of the foregoing vehicles, n.e.s. | 3 | A | 0.0 | 9.3 | 0.2% | 149.0 | 0.0% |
| 8710 | Tanks and other armoured fighting vehicles, motorised, whether fitted with weapons, and parts of such vehicles, n.e.s. | 0 | A | 0.0 | 0.0 | 0.0% | 292.4 | 0.0% |
| 8711 | Motorcycles, incl. mopeds, and cycles fitted with an auxiliary motor, with or without side-cars; side- cars | 7 | A | 45.8 | 2902.6 | 1.6% | 1097.0 | 4.2% |
| 8712 | Bicycles and other cycles, incl. delivery tricycles, not motorised | 15 | A | 8.3 | 56.8 | 14.6% | 403.3 | 2.1% |
| 8713 | Carriages for disabled persons, whether motorised or otherwise mechanically propelled... | 0 | A | 3.2 | 32.6 | 9.8% | 117.8 | 2.7% |
| 8714 | Parts and accessories for motorcycles and bicycles and for carriages for disabled persons, n.e.s. | 4 | A | 4.8 | 988.2 | 0.5% | 486.6 | 1.0% |
| 8715 | Baby carriages and parts thereof, n.e.s. | 3 | A | 0.0 | 0.2 | 0.6% | 157.6 | 0.0% |
| 8716 | Trailers and semi-trailers; other vehicles, not mechanically propelled (excl. railway and tramway vehicles); parts thereof, n.e.s. | 2 | A | 4.4 | 179.0 | 2.4% | 1354.1 | 0.3% |
| 88 | Aircraft, spacecraft, and parts thereof | 1 | A | 134.6 | 3586.7 | 3.8% | 12787.4 | 1.1% |
| 89 | Ships, boats and floating structures | 1 | A | 62.1 | 4201.0 | 1.5% | 993.9 | 6.2% |
| 90 | Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof | 0 | A | 222.0 | 4895.4 | 4.5% | 23058.0 | 1.0% |
| 91 | Clocks and watches and parts thereof | A | 1.1 | 80.6 | 1.4% | 2267.4 | 0.0% | |
| 92 | Musical instruments; parts and accessories of such articles | 0 | A | 1.9 | 45.9 | 4.1% | 376.0 | 0.5% |
| 93 | Arms and ammunition; parts and accessories thereof | 2 | A | 3.0 | 372.1 | 0.8% | 967.1 | 0.3% |
© Copyright , All rights reserved. Design by Andreal