For years, Tamil Nadu’s manufacturers had the factories, skills, export infrastructure and networks to compete in the UK. What was absent was a level playing field. The India-UK Comprehensive Economic and Trade Agreement (CETA), which took effect on July 15, is expected to change the equation by dismantling tariffs that had long eroded the competitiveness of Indian goods.From Tirupur’s knitwear units and Ambur’s footwear factories to Sriperumbudur’s automotive and electronics plants, TN stands to be among the biggest beneficiaries of the pact. The agreement covers trade in goods and services and eliminates or reduces tariffs on 99% of UK tariff lines and 90% of Indian tariff lines.“UK-India CETA is one of the biggest trade deals of modern times. It brings sweeping benefits to a range of sectors across our two economies,” said Sutapa Choudhury, British Deputy High Commissioner for Tamil Nadu, Kerala and Puducherry. She said the state is well placed to capitalise on the agreement, with its strengths in textiles, leather, electronics, engineering goods and auto components. CETA has made UK-India trade cheaper, quicker and easier, creating opportunities for businesses across the state.Industry leaders see the pact as more than a tariff-cutting exercise. “CETA is not a tariff line—it’s a growth runway for TN,” said P Ravichandran, Chairman of CII Southern Region and president of Danfoss India Region.“What CETA does is remove the tariff wall that stood between that capability and full-scale UK market access. For the first time, a Tirupur garment unit, an Ambur tannery, and a Hosur auto-component plant can compete on quality and cost alone, not against a 10-16% tariff handicap. This is a transformative unlock for a state like TN that was primed to seize it,” he said.J. Krishnan, Chairman of International Cooperation Working Group of Madras Chamber of Commerce and Industry, expects the gains to be unusually broad-based. Unlike states dependent on a handful of sectors, TN’s diversified industrial base means benefits are likely to spread across textiles, leather, engineering, electronics and automobiles, supporting exports, investment and employment.Textiles, leather first in lineThe earliest gains are likely to be seen in TN’s labour-intensive textile and leather industries, which employ lakhs and account for a sizeable share of the state’s exports. Together, textile and leather products contributed nearly one-fifth of India’s $13.4bn exports to the UK in FY26. CETA abolishes UK import duties of up to 12% on textiles and garments and up to 16% on leather and footwear. That improves price competitiveness of exporters in the state.Ravichandran believes the agreement removes the pricing advantage long enjoyed by competitors such as Bangladesh and Cambodia. Tirupur’s garment exporters, Coimbatore’s textile manufacturers and Karur’s home textile producers can now compete on equal terms rather than absorb a structural tariff disadvantage.Krishnan expects both established exporters and first-time exporters to benefit. The UK has long been a trusted market for TN’s manufacturers; the agreement should deepen those ties by expanding market access and encouraging longer-term commercial relationships. New exporters gain a landed-cost advantage, while established manufacturers would finally overcome the tariff disadvantage that has constrained growth.India exported $411mn worth of leather goods to the UK in FY26. With duties of up to 16% now removed, the agreement opens access to Britain’s $8.9bn leather and footwear market. Exports are projected to rise to $900mn by 2030.A research note by Bank of Baroda argues that Indian leather exporters will also gain a competitive edge over suppliers from China and Italy, where tariff levels remain higher.Auto sector: Deeper integrationTamil Nadu’s automotive industry is another beneficiary. Vinnie Mehta, Director General of the Automotive Component Manufacturers Association (ACMA), said the state’s dense ecosystem of vehicle manufacturers, component suppliers, engineering centres and MSMEs makes it especially well positioned to capitalise on the agreement.Hosur and Sriperumbudur could see fresh opportunities as tariff-free access boosts exports of auto components and strengthens electric-vehicle supply chains.Indian auto-component exports to the UK rose nearly 11% to about $801 million in FY26 “The CETA provides an opportunity to build on this momentum. It is not merely about increasing exports, but about creating deeper industrial partnerships,” Mehta said.Beyond exports, he expects the agreement to encourage collaboration in electric mobility, lightweight materials, research and development, testing and validation, while also attracting greater investment into the state’s automotive ecosystem.Tariffs are only the first hurdleThe removal of tariffs does not, by itself, guarantee an export boom. Industry representatives argue that the next challenge will be helping companies, especially MSMEs, meet increasingly demanding global standards on sustainability, traceability and certification.“The real test of CETA isn’t whether our large exporters gain, they will. It’s whether a mid-sized Tirupur unit or a Coimbatore precision-engineering shop can actually convert a zero-duty line into a UK order,” Ravichandran said.He called for ESG facilitation desks, UK-accredited testing laboratories, guidance on rules of origin and improvements in logistics infrastructure. Carbon-border adjustment mechanisms, phytosanitary rules and digital traceability requirements, he warned, could become the next barriers to trade if exporters fail to prepare.The India-UK agreement has removed one of the biggest obstacles to India’s exports. Whether Tamil Nadu ultimately emerges as CETA’s biggest winner will depend less on tariffs than on its ability to meet global standards, climb value chains and ensure the gains extend beyond its largest exporters to thousands of smaller manufacturers across the state.(With inputs from Vaitheeswaran.B)
