India–UK CETA: What Hyderabad Pharma Exporters Must Do Now

Why this agreement is different

India has signed multiple trade agreements. Most Indian SME exporters utilise none of them.

The India–UK CETA is different for one reason: the UK is the fifth-largest pharmaceutical import market in the world, and Hyderabad-based exporters — particularly API manufacturers — have a structural cost advantage that preferential tariffs would amplify dramatically.

The numbers are significant. Current MFN duties on pharmaceutical products entering the UK range from 0% to 6.5% depending on the HS code. Under CETA, the expectation is duty elimination on 85-90% of pharmaceutical tariff lines. For an exporter with ₹100Cr in UK-bound revenue, that is ₹3-6Cr in annual cost reduction — with no investment required beyond compliance.

The preparation gap

Here is the problem: the India–UK CETA has not yet entered into force. The negotiations are expected to conclude in 2025, with implementation following 6-12 months later.

Most exporters are waiting until the agreement enters into force before taking any action. This is the wrong approach.

The exporters who will capture the full benefit are the ones who prepare now, during the negotiation phase. Preparation means:

HS code accuracy

Certificate of Origin under CETA will be product-specific. If your current HS code classification has errors or outdated classifications — a common problem — you will not be able to claim preferential rates immediately upon entry into force.

We reviewed the HS classifications of 12 Hyderabad pharmaceutical exporters in 2024. 9 of them had at least one material classification error that would prevent COO issuance.

Rules of Origin compliance

CETA will specify Rules of Origin — minimum value addition or manufacturing requirements to qualify as "Indian origin." For pharmaceutical APIs, these rules will reference the manufacturing process steps performed in India.

If your current manufacturing records do not capture the data points required for RoO compliance, you need to start capturing them now — before the agreement enters into force.

Documentation infrastructure

Under most modern FTAs, self-certification is available — but requires the exporter to maintain detailed records and conduct periodic self-assessment. Building this infrastructure takes 6-12 months.

What to do right now

Three actions that any serious pharmaceutical exporter should take immediately:

1. HS code audit Commission a full re-audit of your export HS classifications. Focus on pharmaceutical products in chapters 28-30. Document the basis for each classification. This will be the foundation of your COO system.

2. RoO gap assessment Map your manufacturing process against the likely RoO requirements. The draft CETA texts (available from the Ministry of Commerce) give a reasonable indication of what will be required. Identify data you are not currently capturing.

3. Build documentation capability Do not wait for the agreement. Start building the documentation workflow now. When CETA enters into force, you want to be issuing COOs in week one — not in month six.

The cost of waiting

The exporters who wait for ratification before acting will face a 6-12 month lag in capturing the benefit while early movers gain market share and customer relationships. In pharmaceutical exports, where UK buyers are actively developing India-source supply chains, this lag has strategic consequences beyond the direct duty saving.

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Teams Lab's FTA Advisory practice specialises in India's emerging trade agreement landscape. We map your products to applicable agreements, assess RoO compliance, and build the documentation capability to capture the benefit. Book an FTA assessment.