Core Agreement Highlights
- Signed on July 24, the Comprehensive Economic and Trade Agreement (CETA) aims to:
- Double bilateral trade by 2030 (from $56B in 2020).
- Cut/eliminate tariffs on 99% of Indian exports to UK.
- Provide labour-intensive sector access (textiles, leather, seafood, gems).
- Remove social security double payments for temporary Indian workers.
Relevance : GS 2(International Relations) ,GS 3(Economy -Import & Export)
India’s Key Economic Gains
- Zero tariffs on:
- Textiles (earlier up to 12%)
- Tea and coffee (earlier up to 10%)
- Footwear, gems, leather goods
- Liquor tariff halved from 150% → 75%, to fall to 40% in 10 years.
- Auto tariffs down from 70–110% to 10% (after 10 years, for limited vehicles).
- Scotch import duties halved: Enhances consumer access and revenue.
Relief on Social Security Contributions
- Through the Double Contributions Convention:
- Indian professionals temporarily working in UK (up to 10 years) will no longer pay into both UK and Indian social security systems.
- Benefits ~75,000 Indian workers.
- Reduces costs for Indian employers and raises net salary for workers.
Broader Trade & Investment Impacts
- Merchandise trade projections:
- India’s exports to UK to rise 12.6% by 2024–25 to $14.5B
- Imports from UK to grow 2.3% to $8.6B
- FTA aims to increase bilateral trade volume by nearly $34.5B annually by 2040.
- Sectors gaining access:
- Dairy, machinery, pharmaceuticals, IT services, processed food.
Movement of People & Services
- UK side gains:
- Professional access in legal, financial, education, and consulting services.
- UK has created an annual quota of 1,800 short-term work visas (e.g. chefs, yoga teachers, classical musicians).
- Faster mobility for UK service professionals in India — with simplified regulatory framework.
Strategic & Defence Roadmap (Vision 2035)
- Both nations launch Vision 2035:
- Focus on defence, AI, education, climate, cyber, and clean energy.
- Aligns with India’s technology sovereignty and national security goals.
- Joint Defence Industrial Roadmap to:
- Facilitate co-production
- Share critical mineral access
- Boost cyber security cooperation
Retrospective Linkages
- First major UK FTA after Brexit (2016).
- Builds on India’s shift toward bilateralism after RCEP exit (2019).
- Similar to India’s FTAs with Australia (ECTA, 2022), UAE (CEPA, 2022), ASEAN.
Future Implications
- Can become a template for India–EU FTA negotiations.
- Promotes India’s goal of $1 trillion goods exports by 2030.
- Boosts India’s global reputation as a trade partner amid de-risking from China.
