The India-UK FTA is expected to boost key sectors, including textiles, leather, footwear, sports goods and toys, marine products, gems and jewellery, engineering goods, auto parts and engines, and organic chemicals.
INDIA AND the United Kingdom Thursday signed the much-awaited bilateral free trade agreement in the backdrop of a global trade environment that looks volatile with threats of reciprocal tariffs by the United States of America under President Donald Trump.
The Comprehensive Economic and Trade Agreement (CETA) promised to usher in “not just an economic partnership but a plan for shared prosperity” for both countries, said Prime Minister Narendra Modi. Addressing the media after signing the deal at UK Prime Minister Keir Starmer’s country home ‘Chequers’, he called it a historic day as “after years of hard work, both nations have completed the Comprehensive Economic and Trade Agreement”.
Starmer called it the most important deal after Brexit for the UK.
Both the leaders had, on May 6, announced the successful conclusion of negotiations. The joint goal of the two countries is to double the bilateral trade in goods and services by 2030 from $56 billion now, India’s Commerce and Industry Ministry said.
The signing of the agreement comes weeks after the UK became the first country to finalise a trade deal with the US in early May. India is also aggressively pursuing a deal with the US. Just last week, commerce ministry officials concluded an extended round of talks in Washington D.C., with the next round scheduled for mid-August. India hopes to finalise an interim trade pact with the US by August 1, the date Trump’s reciprocal tariffs will kick in.
Elaborating on what the deal means for India, Modi said, “For the people and industry of India, products made in the UK, such as medical devices and aerospace parts — will be available at accessible and affordable rates. The agreement will prove particularly beneficial for India’s youth, farmers, fishermen, and MSME sector.”
In a statement, the UK government said the deal would increase bilateral trade between the two countries by nearly 39 per cent in the long run — this is equivalent to $34.5 billion a year, when compared to 2040 projected levels of trade in the absence of an agreement.
India’s merchandise exports to the UK rose by 12.6 per cent to $14.5 billion in 2024-25, while imports grew 2.3 per cent to $8.6 billion. The India-UK deal unlocks tariff-free access on 99 per cent of Indian exports to the UK, covering nearly 100 per cent of trade value- including labour-intensive sectors, the Indian Commerce and Industry Ministry said.
Consumers in India are expected to benefit from improved access to a variety of British products — from soft drinks and cosmetics to cars and medical devices — as average tariffs will drop from 15 per cent to 3 per cent.
Also, 45 per cent of India’s merchandise exports to the UK will not attract any duty, giving a boost to labour-intensive sectors such as textiles and leather, according to New Delhi-based think-tank Global Trade Research Initiative (GTRI).
In terms of concessions, India will first halve the duty on Scotch whisky from the UK to 75 per cent and then to 40 per cent over 10 years. In what is seen as a landmark move, duties on automobiles will be cut in a phased manner. As per the deal, India will lower import duties on British cars over 15 years to just 10 per cent from more than 100 per cent for luxury cars. However, the reduced rate of tariff will apply only to 10,000 units, which will rise to 19,000 in the fifth year.
India has excluded several high-sensitivity agricultural products from any tariff concessions. This includes dairy, fresh apples, walnuts, whey and modified whey, blue-veined cheese, and specific seed categories such as vegetable seeds and sugar beet seed. The UK had excluded various meat products and egg-based items, among others, from discussions.
“This CETA marks a milestone in the trade relations between two major economies, setting an ambitious and balanced framework,” Commerce Minister Piyush Goyal said.
Movement of people
Mobility of workers, which had been a bone of contention as India sought improved access for its services sector amid heightened sensitivities in a post-Brexit UK, saw both countries engaging in some give and take. The agreement ensures no caps on the number of UK service providers, although India maintained some regulatory carve-outs, such as in legal services, taxation, and national security, New Delhi-based think-tank Global Trade Research Initiative (GTRI) said.
“In contrast, the UK’s services offer to India is more cautious and limited in scope. While it grants commercial presence rights in sectors like computer services, consultancy, and environmental services, its commitments on professional mobility are modest,” GTRI said.
The UK has created an annual quota of 1,800 for temporary entry of traditional chefs, classical musicians, and yoga instructors, although no binding commitment has been made on broader visa categories, including business visitors or IT professionals, GTRI said.
In addition to the trade agreement, a consensus was also reached on the Double Contributions Convention, under which workers from India and the UK temporarily working in the other country for up to three years will only have to make social security contributions in their home countries. “This will inject new energy into the service sectors of both countries, especially in technology and finance. It will promote ease of doing business, reduce the cost of doing business, and increase the confidence of doing business,” Modi said. The UK economy would benefit from India’s skilled talent and enhance investment and generate new employment opportunities in both countries.
India’s services exports to the UK rose 16 per cent in 2024 to £14.7 billion, according to data from the Office of National Statistics, while services imports from the UK were flat at £10.1 billion.
Vision 2035, defence roadmap
India and the UK Thursday also unveiled a Vision 2035 document to give “new momentum and energy” to the strategic partnership between the two countries over the coming decade, Modi said. The roadmap will form the basis of a “strong, trustworthy, and ambitious partnership” in the fields of technology, defence, climate, education, and people-to-people connectivity, he added.
A defence industrial roadmap has also been drawn up for partnership in defence and security, with work to also continue on strengthening the technology security initiative, with the Indian Prime Minister saying the countries were committed to creating a future together in the fields of artificial intelligence to critical minerals and semiconductors to cybersecurity.
“I would be remiss not to mention cricket when India and the UK are coming together, especially during a Test series. For both of us, cricket is not just a game, but a passion and also a great metaphor for our partnership. There may be a swing, a miss at times, but we always play with a straight bat. We are committed to building a high-scoring, solid partnership. The agreements concluded today and Vision 2035 are milestones which advance this very spirit.”
United against terrorism
Modi and Starmer also shared views on peace and stability in the Indo-Pacific, the ongoing conflict in Ukraine, and the situation in West Asia.Thanking Starmer for the British government’s “strong condemnation” of the terrorist attack in Pahalgam on April 22, Modi said the two countries were united in their view that there was no place for double standards in the fight against terrorism and that extremist ideologies could not be allowed to misuse democratic freedoms. Modi also invited Starmer to India, saying he was looking forward to hosting him “very, very soon”.
Commenting on the trade agreement, UK Business and Trade Secretary Jonathan Reynolds said the deal puts the UK in the best position to partner with India over the next decade and promises to unlock thousands of jobs and boost growth across both economies.
“The nearly £6 billion in new investment and export wins announced today are a sign of things to come, as future collaboration expands into advanced technologies, critical minerals, green finance, and beyond,” he said.
Source: Indian Express
