Why has the India-UK Free Trade Agreement rollout been delayed? – Firstpost

The rollout of the India-UK Comprehensive Economic and Trade Agreement (CETA) — initially scheduled for implementation this month — has hit a late-stage roadblock.

The setback comes despite the fact that negotiations had formally concluded in 2025, the agreement had already been signed by both sides, and much of the ratification process had moved close to completion by early 2026.

India’s Commerce Secretary Rajesh Agrawal confirmed on Friday (May 15, 2026) that the trade pact remains close to implementation but acknowledged that new steel-related measures introduced by Britain had emerged as a major sticking point.

“On the India-UK FTA we are very near to operationalising that. There are a few sticking points as you are aware,” Agrawal told reporters, adding that the steel measures were not factored in during negotiations.

Officials in New Delhi and London are now attempting to resolve a narrow but economically significant dispute linked to market access for steel exports.

Negotiators are now trying to craft what Indian officials have described as a “creative solution” that could allow the agreement to move ahead while accommodating Britain’s domestic industrial concerns.

Both governments have repeatedly projected that the broader deal could more than double bilateral trade by the end of the decade, while also unlocking new access across sectors ranging from manufacturing and textiles to automobiles, whisky, agriculture, services, and technology.

What caused the delay in the India-UK trade pact?

The immediate trigger behind the delay was Britain’s decision to tighten safeguards on imported steel as part of a wider domestic Steel Strategy announced earlier this year.

In March 2026, the UK government introduced revised rules aimed at protecting its domestic steel producers from mounting international competition and a surge in global supply. The new measures are scheduled to take effect from July 1, 2026.

Under the revised system, Britain will sharply reduce the quantity of steel allowed into the country under tariff-free quotas. The updated framework cuts overall quota volumes by roughly 60 per cent compared to existing safeguard arrangements.

At the same time, imports crossing those quota limits will face a steep 50 per cent tariff, significantly higher than the earlier 25 per cent rate.

The British government stated that “overall quota volumes will be cut by approximately 60 per cent compared to the current safeguard arrangements.”

It added, “Once the reduced quotas are exhausted, imports will be subject to a 50 per cent tariff, an increase from the current 25 per cent above quota tariff.”

For India, the timing of the policy change has become a concern. The steel restrictions were announced long after the text of the India-UK agreement had already been finalised, meaning negotiators never accounted for the new import curbs while drafting the trade deal.

Indian officials now believe that the fresh quotas and higher duties could dilute some of the market access benefits that Indian exporters were expecting to receive once the agreement became operational.

Agrawal acknowledged the issue directly while speaking to reporters. “We are very near to operationalising the India-UK FTA,” he said.

“There are a few sticking points. The UK has come ahead with a steel measure recently which was not factored in while negotiating the India-UK FTA. We are working together to find a creative solution around this trade measure also so we can operationalise the India-UK CETA at an early date.”

Why is the UK’s steel policy important for India?

According to the available trade figures, India exported around $893.4 million worth of iron, steel, and related products to the UK during the 2025-26 fiscal year.

Those shipments formed a notable part of India’s total merchandise exports to Britain, which stood at approximately $13.4 billion during the same period.

Indian steel producers had anticipated improved access to the British market under CETA because the agreement was expected to reduce tariffs and expand preferential entry conditions for several categories of exports.

With tariff-free quotas being reduced substantially and above-quota duties rising to 50 per cent, Indian exporters now face the possibility that large volumes of steel shipments could become commercially less competitive in the British market.

The concern within Indian trade circles is not simply about tariffs themselves, but about whether the broader spirit of preferential market access promised under the agreement is being weakened before the pact has even entered into force.

The dispute has emerged at a particularly sensitive moment because businesses in both countries had already begun preparing for implementation.

How did India and UK finalise a trade agreement?

Formal negotiations for the India-UK trade pact began in January 2022 and continued for more than three years before the final text was completed.

During that period, negotiators from both countries conducted over 14 rounds of discussions covering tariffs, services, investment rules, mobility arrangements, and regulatory standards. The talks also unfolded against a backdrop of political change in both countries, including general elections in 2024.

One of the most contentious areas involved Britain’s push for lower Indian tariffs on Scotch whisky and British-made automobiles.

India currently imposes steep import duties on both sectors,
including tariffs of around 150 per cent on Scotch whisky and
roughly 100 per cent on British automobiles. London consistently sought significant reductions in those duties during negotiations.

New Delhi, meanwhile, focused heavily on mobility-related issues. New Delhi pushed for easier visa rules, improved movement for skilled workers, and simplified entry procedures for Indian IT professionals and business personnel travelling to Britain.

Negotiators also spent considerable time addressing technical areas such as rules of origin, which determine how much local content a product must contain in order to qualify for tariff benefits under the agreement.

Intellectual property provisions, particularly those connected to pharmaceuticals, also required prolonged discussions before compromises were reached.

Despite those obstacles, the two governments eventually finalised the agreement on May 6, 2025.

The pact
was formally signed on July 24, 2025, during Prime Minister Narendra Modi’s official visit to London, marking what both governments described at the time as a major milestone in bilateral relations.

British Prime Minister Keir Starmer also
made his first official visit to India on October 8-9, 2025, bringing with him a major delegation of more than 100 CEOs, university vice-chancellors and entrepreneurs.

What stage has the ratification process reached?

Although the agreement has not yet entered into force, much of the formal approval process has already been completed.

In the United Kingdom, the treaty was formally laid before Parliament in January earlier this year. It subsequently underwent scrutiny and debate in the House of Commons on February 9, 2026, before clearing both houses of UK Parliament by March.

India follows a different mechanism for approving trade agreements. Unlike Britain, India does not require parliamentary ratification for free trade agreements. Instead, such agreements are approved through the executive route.

At present, the India-UK pact is awaiting final Cabinet-level approval in New Delhi.

Officials are reportedly coordinating that process alongside ongoing discussions over the steel issue so that both matters can be resolved before announcing the agreement’s formal Entry into Force (EIF) date.

Why is the India-UK FTA important?

Both governments have repeatedly presented the India-UK CETA as one of the most consequential economic agreements signed since Britain’s exit from the European Union.

The UK Parliament has described the pact as “the UK’s most economically significant bilateral free trade agreement since leaving the European Union.”

The main economic objective of the agreement is to dramatically increase trade flows between the two countries over the coming years.

Officials from both sides have targeted bilateral trade in goods and services of around $120 billion by 2030, more than double the roughly $56.9 billion recorded during 2024-25.

For Britain, the agreement is expected to reduce tariffs on exports entering the Indian market by substantial margins. British government estimates suggest that the deal could lower tariffs on UK exports to India by nearly £400 million annually in the short term, with those benefits potentially increasing to around £900 million over the next decade.

British projections also estimate that the agreement could raise long-term UK GDP by approximately 0.13 per cent, equivalent to around £4.8 billion.

India, meanwhile, stands to gain expanded access across a wide range of export sectors. Under the agreement, nearly 99 per cent of Indian exports are expected to receive duty-free access to the British market.

Industries expected to benefit include textiles, footwear, machinery, engineering goods, and agricultural products.

In exchange, India agreed to gradually eliminate tariffs on roughly 90 per cent of British tariff lines over a phased period.

The agreement was therefore designed not merely as a tariff-reduction exercise, but as a broader strategic economic partnership intended to deepen commercial integration between the two economies after Brexit.

Earlier this year, Commerce Minister Piyush Goyal
had expressed confidence that the agreement would become operational by April-May. While that timeline now appears to have slipped, officials still expect the pact to eventually come into force once the steel dispute is resolved.

With inputs from agencies