The India-United Kingdom Comprehensive Economic and Trade Agreement (CETA) was signed in 2025, marking development in bilateral relations amid global geopolitical tensions and trade conflicts. The deal promises extensive tariff reductions and enhanced market access, aiming to boost trade and economic cooperation between the two nations.
of the Agreement
The agreement was signed after 42 months of negotiations by Indian Commerce Minister Piyush Goyal and UK counterpart Jonathan Reynolds. The ceremony was attended by Prime Ministers Narendra Modi and Keir Starmer at Chequers, the UK Prime Minister’s official residence. The deal is India’s most comprehensive trade pact with a major developed economy and is expected to double bilateral trade from $56 billion by 2030.
Key Provisions of the Trade Deal
Ninety-nine per cent of Indian exports to the UK will enter duty-free. Conversely, 90 per cent of UK goods will gain tariff-free access to India. Indian exports like textiles, footwear, gems, jewellery, seafood, and engineering goods will benefit . UK exports such as medical devices and aerospace components will become more affordable in India.
Tariff Reductions and Sectoral Concessions
India will reduce tariffs on whisky from 150 per cent to 40 per cent over ten years. Automobile tariffs, currently up to 110 per cent, will fall to 10 per cent within quota limits. Consumer goods like soaps, perfumes, and nail polish will see phased tariff eliminations. However, tariffs on electric, hybrid, and hydrogen vehicles remain unchanged for five years. Sensitive products like apples, cheese, gold bars, and smartphones are excluded from tariff cuts. The UK excludes meat, rice, sugar, and eggs from liberalisation.
Public Procurement and Market Access
UK firms will access India’s government procurement market, bidding on approximately 40,000 tenders worth £38 billion annually. UK-origin goods with 20 per cent domestic content qualify as Class II local suppliers under India’s Public Procurement Order. This lowers the previous requirement of 20–50 per cent local content, potentially allowing UK firms to source inputs from third countries, diluting domestic industry protections.
Social Security and Other Agreements
Alongside CETA, a Double Contributions Convention was signed to prevent double social security payments for three years. This benefits around 75,000 Indian professionals working in the UK. India has raised concerns over the UK’s upcoming Carbon Border Adjustment Mechanism, which remains unaddressed in the deal.
Trade and Strategic Implications
The agreement strengthens economic ties amid global trade uncertainties. It is a strategic move to enhance cooperation between two democracies. However, some experts worry about the impact on India’s domestic manufacturing and ‘Make in India’ initiatives due to relaxed local content rules. The deal signals a shift towards deeper integration but also raises questions about safeguarding national industrial interests.
Questions for UPSC:
- Discuss in the light of India-United Kingdom trade relations, the role of comprehensive trade agreements in promoting bilateral economic growth.
- Critically examine the impact of tariff liberalisation on domestic industries with reference to India’s trade policies under the Comprehensive Economic and Trade Agreement.
- Explain the significance of public procurement policies in international trade agreements. How do such policies affect domestic manufacturing and foreign investment?
- With suitable examples, discuss the challenges and opportunities posed by Carbon Border Adjustment Mechanisms for developing countries like India in global trade.
