Paper: GS – II, Subject: International Relations, Topic: Agreement Involving India, Issue: India – UK Free Trade Agreement.
Context:
The Comprehensive Economic Trade Agreement (CETA) signed between India and the United Kingdom during Prime Minister Narendra Modi’s visit to the U.K.
- It highlights the anticipated benefits for both nations, the expanded cooperation framework ‘India-U.K. Vision 2035’, and the broader implications for global trade and security.
Key Takeaways:
About India- UK Free Trade Agreement (FTA):
What is a Free Trade Agreement (FTA)?
- A Free Trade Agreement (FTA) is a bilateral or multilateral pact between countries to reduce or eliminate customs duties and non-tariff barriers on the majority of traded goods and services.
- FTAs facilitate:
- Duty-free access to partner markets
- Regulatory simplification Cross-border investments
- Mobility of professionals
- Preferential treatment over non-FTA competitors,
- Globally, over 350 FTAs are operational, with most countries party to at least one.
Background of the India–U.K. FTA:
- Negotiations began in January 2022 after Brexit, symbolising U.K.’s independent trade ambitions.
- Talks were delayed due to frequent political transitions in the U.K. and elections in both countries.
- After 14 rounds of negotiations, the agreement was finalised in May 2025, followed by a conversation between PM Narendra Modi and PM Keir Starmer.
What will India and the UK Gain from the India-UK FTA?
India:
- India’s labour-intensive sectors such as apparel and gems and jewellery have seen a steep decline in market share over the last five years.
- Indian textile exports face tariffs as high as 10% in the UK; a trade deal could put India on par with competition such as Bangladesh, and revive textile exports.
UK:
- Notably, the average tariff on goods imported from India into the UK is 4.2% but the average tariff in India on goods imported from the UK is 14.6%
- British exports to India such as cars, Scotch whisky, and wines, face considerable tariffs of 100-150%.
- Tariff reductions on these goods will potentially offer UK deeper access into Indian markets.
India – U.K. Free Trade Agreement (FTA) Key Provision and Impact:
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