India–UK Comprehensive Economic and Trade Agreement (CETA)

India–UK Comprehensive Economic and Trade Agreement (CETA): Opportunities and Challenges

Introduction

On 24 July 2025, India and the United Kingdom officially signed the Comprehensive Economic and Trade Agreement (CETA) — a landmark trade deal aimed at enhancing bilateral economic relations. This agreement comes after years of negotiation and is expected to significantly increase trade in goods, services, and investments between the two nations. CETA is broader than a typical Free Trade Agreement (FTA), as it also includes cooperation on technology, intellectual property rights, environmental sustainability, and people-to-people exchanges.

Background: India–UK Trade Relations

India and the UK share a long history of economic cooperation rooted in historical, cultural, and strategic ties.

• In FY 2024–25, bilateral trade between India and the UK was estimated at USD 22 billion, with India exporting goods like textiles, gems & jewellery, IT services, and pharmaceuticals, while importing machinery, electrical equipment, and Scotch whisky from the UK.
• The UK has also been a key source of Foreign Direct Investment (FDI) for India, ranking among the top 10 investors.
• Brexit opened new opportunities for India to negotiate directly with the UK, free from EU trade regulations.

Key Provisions of CETA

The India–UK CETA is designed to remove trade barriers, enhance market access, and promote strategic cooperation. Major provisions include:

• Tariff Reductions and Elimination
• • Gradual removal of tariffs on over 90% of traded goods between the two countries.
  • Special focus on sectors like textiles, automotive components, IT hardware, and agricultural products.
• Services Liberalisation
  • Easier market access for IT services, financial services, and legal services from India to the UK.
  • Recognition of professional qualifications in sectors like law, accountancy, and engineering.
• Investment Protection
  • Strengthened safeguards for investors through bilateral investment treaties.
  • Clear dispute resolution mechanisms to protect businesses.
• Mobility and Skilled Workforce Exchange
  • Provisions for easier visa access for students, professionals, and entrepreneurs.
  • Expansion of work-study programmes between universities.
• Intellectual Property Rights (IPR)
  • Stronger IPR protections, especially in pharmaceuticals, creative industries, and technology.
• Sustainable Development and Green Trade
  • Joint commitment to promote renewable energy, climate-friendly technologies, and ESG investments.

Opportunities for India

• Export Boost
  • Lower tariffs will make Indian goods more competitive in the UK market.
  • High potential for growth in textiles, leather goods, and agri-products.
• IT & Service Sector Expansion
  • Indian IT companies will get greater market access in the UK.
  • Legal and consultancy firms from India can cater to UK clients more freely.
• Job Creation & Skill Development
  • Increased investment will create jobs in manufacturing, infrastructure, and services.
  • Indian professionals in healthcare, IT, and engineering may see more opportunities in the UK.
• Technology Transfer
  • Collaboration in AI, renewable energy, and space research could accelerate India’s technological progress.

Challenges & Concerns

• Domestic Industry Competition
  • Certain Indian industries may face competition from UK imports, particularly in high-quality machinery and spirits.
• Regulatory Compliance
  • Indian exporters must adapt to UK’s quality, safety, and environmental standards, which could increase costs.
• Intellectual Property Issues
  • Stronger IPR rules might affect the generic drug industry in India.
• Geopolitical and Trade Uncertainties
  • Global trade tensions or changes in UK immigration policy could affect the agreement’s implementation.

Impact on India–UK Relations

• Strategic Partnership Strengthening: CETA cements India and the UK’s status as comprehensive strategic partners.
• Post-Brexit Opportunities: The UK gains a major economic partner in Asia, while India gains direct access to the UK market.
• Global Trade Significance: This agreement signals India’s commitment to engaging in high-value trade partnerships beyond Asia.

Probable Competitive Exam Questions

1. When was the India–UK Comprehensive Economic and Trade Agreement (CETA) signed?
   Ans: 24 July 2025
2. Which two countries are part of CETA signed in 2025?
   Ans: India and the United Kingdom
3. CETA aims to remove tariffs on what percentage of traded goods?
   Ans: Over 90%

Conclusion

The India–UK Comprehensive Economic and Trade Agreement (CETA) represents a major leap forward in bilateral relations. It promises economic growth, job creation, and technological advancement, but it also requires careful handling of domestic industry concerns and regulatory adjustments. For students and competitive exam aspirants, knowing its date, provisions, and significance will be crucial for upcoming current affairs sections.