The India-UK Comprehensive Economic and Trade Agreement (CETA), signed in July 2025, marks the most significant bilateral trade deal the UK has concluded since leaving the EU. For Indian exporters, the opportunity is substantial. Bilateral trade currently stands at $56 billion, with a target to reach $120 billion by 2030. Duty-free access is now available on 99% of Indian tariff lines, and the number of Indian-owned UK businesses surged 23% in 2025 alone, generating £72 billion in combined revenue.
The scale of what is achievable is already visible. Wipro grew UK revenues by 448% and Zoho by 197% in 2025. Tata Group has built a diversified UK presence spanning Tetley, Jaguar Land Rover and Tata Chemicals. OYO invested £40 million into the UK market, creating over 120 jobs. The common thread across every success story is the same: early compliance investment and local operational credibility.
For Indian CFOs, understanding UK VAT from day one is non-negotiable. While the standard 20% rate will feel familiar to those versed in GST, the UK system is unforgiving in practice. Registration thresholds, zero-rating rules and the £135 low-value goods threshold all require precise structuring before the first shipment leaves. A 2025 Upper Tribunal ruling confirmed that zero-rating on exports depends on holding the correct documentary evidence at the right time, not simply on the fact of export.
Cash flow is perhaps the most underestimated challenge. Import VAT is payable at the UK border unless Postponed Import VAT Accounting (PIVA) is elected in advance. This single mechanism can materially protect working capital in the critical early months of trading. Incoterms selection matters equally, and DDP arrangements should be avoided until a full VAT position is established.
Route to market also carries significant tax consequences. Selling via a marketplace like Amazon may remove the need for direct VAT registration, but a single direct sale shifts that obligation back to the seller. The entry model must be defined before the first transaction, not after the first HMRC enquiry.
The five most common mistakes including underestimating registration lead times, misreading zero-rating, ignoring EPR obligations, treating compliance as a back-office function and failing to appoint a specialist adviser early are all avoidable with the right support in place from the start.
