Why in news?
India and the United Kingdom concluded negotiations on a far‑reaching Comprehensive Economic and Trade Agreement (CETA). The pact, announced in late July 2025, aims to double bilateral trade by 2030 and deepen cooperation beyond goods into services, investments and people‑to‑people ties.
Background
The United Kingdom is one of India’s oldest economic partners. After the UK left the European Union its trade policy shifted to build new bilateral agreements. India and the UK launched negotiations in 2022 and set an ambitious goal of concluding a comprehensive deal that goes beyond the limited Early Harvest Agreement. The CETA covers tariff reduction, smoother movement of professionals, mutual recognition of professional qualifications and cooperation in areas such as defence, clean technology and higher education.
Key features of the agreement
- Tariff elimination: The UK will remove duties on almost all Indian goods, giving 99 % of Indian exports duty‑free access. India will reciprocate on a slightly lower percentage, protecting sensitive sectors but still opening its market for British goods such as machinery, automobiles and alcoholic beverages.
- Services and mobility: Both sides commit to open up sectors such as IT, healthcare and financial services. Indian professionals will receive easier visa procedures, and the agreement recognises professional qualifications to reduce red tape.
- Double Contribution Convention (DCC): Indian workers in the UK currently contribute to both Indian and British social security schemes. The agreement introduces a convention to avoid dual contributions, lowering costs for employers and employees.
- Rules of origin and market access: Simplified rules of origin will ensure that intermediate goods originating in third countries can still qualify for tariff preferences if substantial value addition happens in India or the UK. Sectors expected to gain include textiles, pharmaceuticals, engineering goods and agriculture.
- Inclusive growth provisions: Special chapters address micro‑, small‑ and medium‑sized enterprises (MSMEs), women entrepreneurs and sustainable development. Capacity‑building programmes and funding support aim to ensure that smaller businesses and under‑represented groups benefit from the deal.
- Strategic cooperation: Alongside trade, the two countries agree to collaborate on defence research and development, clean energy projects, digital innovation and higher‑education partnerships. These areas are expected to deepen strategic ties and reduce dependence on third countries.
Significance
The CETA marks one of India’s most comprehensive free‑trade agreements with a developed economy. It offers Indian exporters duty‑free access to a high‑income market and enhances the flow of students, professionals and investment. The deal also signals India’s willingness to engage deeply with global trade rules while safeguarding vulnerable sectors. For the UK the agreement demonstrates its post‑Brexit trade strategy and provides access to the world’s fastest‑growing large economy.