UK-India FTA roll-out sets to sharpen Indian leather competitiveness

The Indian leather and footwear industry is preparing for a structural shift in its global export dynamics following the joint announcement by New Delhi and London that the India-UK Comprehensive Economic and Trade Agreement (CETA) will officially come into force on 15 July 2026.

The operationalisation of the pact marks an important milestone as the first bilateral trade deal between India and a Western nation to take effect, following its signing on 25 July 2025 in London. The implementation date was finalised by Prime Minister Narendra Modi and his British counterpart, Keir Starmer, during a bilateral meeting on the margins of the G7 summit, concluding a process that spanned 14 rounds of negotiations.

For British buyers and Indian manufacturing houses, the most significant component of the agreement is the immediate dismantling of fiscal barriers. The UK is set to eliminate tariffs on 99 per cent of Indian tariff lines, covering nearly 100 per cent of India’s current export value to the region. Crucially, the up to 16 per cent tariff previously levied on Indian leather products and footwear enters a zero-duty regime from day one. In return, India will cut around 90 per cent of its own tariff lines in a staggered framework, aiming for an 85 per cent reduction within the next decade, by 2036, while explicitly ring-fencing sensitive domestic sectors like dairy, cereals, oilseeds, and vegetables.

British government projections indicate the deal is poised to expand bilateral trade by approximately £25.5 billion annually in the long term, boosting India’s gross domestic product by £5.1 billion and the UK’s GDP by £4.8 billion per annum. The total removal of the 16 per cent tariff wall is expected to alter competitive advantages across South Asian supply chains. Historically, Indian leather and footwear manufacturers have operated at a distinct pricing disadvantage compared to regional competitors like Bangladesh and Vietnam, both of which have leveraged preferential market access and low-cost production models to anchor their presence in the British high street.

Industry leaders believe the most immediate impact of this fiscal alignment will be felt directly on the factory floor.

"The implementation of the UK-India FTA is an important step toward leveling the playing field for Indian leather and footwear manufacturers. For years, preferential tariff access gave countries like Bangladesh and Vietnam a competitive edge over Indian exports. Securing zero-duty access addresses this imbalance, letting our quality and manufacturing capabilities drive our growth,” said Ramesh Kumar Juneja, Chairman, India’s Council for Leather Exports (CLE). “To maximize this opportunity, our strategy centres on diversifying into new markets and increasing international outreach. In coordination with the Export Promotion Council, we are prioritizing trade exhibitions, global fairs, and direct buyer-seller meetings to secure new business overseas," Juneja added.

“The operationalisation of the India-UK FTA this July is an important moment for the domestic leather and footwear sector,” stated Md. Zia Nafis, Regional Chairman (East) of India’s Council for Leather Exports (CLE), and Chief Executive Officer of Nafis Tanning Industries. “By eliminating steep tariff barriers, the pact provides a vital impetus to our exports, effectively neutralising the historical pricing advantages held by regional competitors like Bangladesh, Vietnam and China,” he added.

The pact effectively bridges this long-standing handicap, positioning Indian enterprises to compete on both price and scale. Trade economists note that while traditional regional trade flows will not vanish overnight, the elimination of the tariff barrier allows India to capture a larger share of the UK's premium consumer market.

“The simultaneous enforcement of the CETA and the Double Taxation Avoidance Agreement on 15th July 2026 will open up significant new opportunities for India’s exports. By securing immediate duty-free access on 99 per cent of our tariff lines, we have systematically dismantled long-standing tariff walls. This will effectively level the playing field, allowing our textiles, leather, marine, engineering, and processed food sectors to compete with no disadvantage and supply their world-class products,” Union Commerce and Industry Minister Piyush Goyal said in a statement.

The trade development follows closely on the heels of India's recent diplomatic initiatives, including the operationalisation of the India-Oman free trade agreement on 1 June, which similarly removed a 5 per cent import duty across Muscat for Indian leather and textiles. Minister Goyal underlined that by delivering significant benefits to labour-intensive sectors, the pact will support job creation, drive investment, and enable Indian enterprises to compete on an equal footing with suppliers from countries enjoying preferential market access. The minister added that the agreement is expected to significantly boost MSMEs, manufacturing, and employment by enhancing competitiveness in labour-intensive sectors such as gems and jewellery, textiles, leather, footwear, marine products, engineering goods, processed foods, and pharmaceuticals.

For India’s leather and footwear industry stakeholders, the regulatory certainty of zero-tariff access is anticipated to trigger a fresh wave of capital investment into India’s domestic leather tanneries and footwear manufacturing hubs. With export orders expected to migrate toward Indian suppliers, the treaty provides a stable, long-term framework for corporate sourcing strategies, reinforcing India’s broader economic objective to scale up its manufacturing footprint through high-value, preferential trade corridors with major global economies.