Why in news?

India and the United Kingdom signed a landmark Comprehensive Economic Trade Agreement (CETA) during Prime Minister Narendra Modi’s visit to the U.K.

Alongside the agreement, both countries unveiled a new strategic cooperation plan — the India-U.K. Vision 2035, replacing the earlier Roadmap 2030. The Vision document outlines a comprehensive roadmap to deepen strategic ties across trade, technology, defence, education, climate, and innovation. It aims to boost jobs, investments, clean energy, and people-to-people links, anchored in shared democratic values and high-level political engagement to ensure mutual growth and global leadership.

What’s in Today’s Article?

• Key Highlights of the India-UK Free Trade Agreement
• Impact of India-UK Trade Deal
• Conclusion

Key Highlights of the India-UK Free Trade Agreement

• The India-UK Free Trade Agreement (FTA), signed on July 24, 2025, offers comprehensive economic gains for India across goods, services, and labour mobility.
• Here’s a sector-wise summary:
• 
• Market Access: 99% Duty-Free Trade
  • India’s Gains: 99% of Indian exports to the UK will now be duty-free, benefitting nearly all trade value.
  • UK’s Gains: 90% of tariff lines will be reduced, with 85% becoming zero-duty within 10 years.
  • Sectors Impacted: Labour-intensive industries like marine, textiles, chemicals, base metals, and processed foods.
    • Tariffs on processed foods drop from 70% to zero; tea, coffee, spices, rubber, and plastics gain free access.
• Agriculture: Boost to Rural Economy
• Duty-Free Access: 95%+ tariff lines now zero-duty.
• Products Covered: Fruits, vegetables, pulses, spices, pickles, jackfruit, millets, organic herbs.
• Export Potential: Agri-exports could rise 20% in 3 years, aiding India’s $100B agri-export target by 2030.
• Sensitive Items Protected: Dairy, oats, apples, edible oils.
• Marine Products: A $5.4 Billion Opportunity
  • Tariff Elimination: Zero tariffs on shrimp, tuna, fishmeal, etc.
  • Current Share: India has only 2.25% share in UK marine imports.
  • Growth Potential: Major boost expected for India’s coastal economy.
• Textiles & Apparel: Enhanced Competitiveness
  • Coverage: 1,143 product categories, all duty-free.
  • Market Impact: India may gain 5% more UK market share.
  • Key Products: Ready-made garments, carpets, handicrafts, home textiles.
  • Advantage: Levels playing field with Bangladesh and Cambodia.
• Engineering Goods: Export Surge Expected
  • Current Status: $4.28B exports to UK; UK imports $193.5B globally.
  • Tariff Cuts: Up to 18% duties scrapped.
  • Projection: Engineering exports may double to $7.5B by 2030.
• Pharmaceuticals & Medical Devices
  • Tariff Elimination: On generic medicines and medical devices.
  • Market Potential: UK imports $30B pharma; India exports just $1B.
  • Products Covered: ECG machines, X-ray systems, surgical equipment.
• Chemicals & Plastics
  • Chemical Sector: Exports to rise 30–40% to $650–750M in FY26.
  • Plastic Sector: Focus on films, sheets, kitchenware; 15% export growth targeted.
  • Advantage: More competitive pricing versus global suppliers.
• Toys, Sports Goods, Gems & Jewellery
  • Toys & Sports Goods: Export edge over China and Vietnam.
  • Jewellery: Exports may double in 2–3 years to capture UK’s $3B market.
• Leather & Footwear
  • Tariff Removal: 16% duties scrapped.
  • Export Target: To exceed $900M.
  • Beneficiaries: MSME hubs in Agra, Kanpur, Kolhapur, Chennai.
• Services & Professionals: A Global Edge
  • Worker Benefits: 75,000 Indians exempt from UK social security for 3 years.
  • Sectors Opened: 36 services sectors without Economic Needs Test.
  • Professional Access: Indian professionals can work in 35 UK sectors for 2 years.
  • Cultural Exchange: 1,800 chefs, yoga trainers, and artists to be welcomed annually.

Impact of India-UK Trade Deal

• Gains for Indian Sectors - India’s key export sectors — including agriculture, processed food, textiles, footwear, seafood, gems and jewellery, and engineering goods — will enjoy expanded market access in the U.K. thanks to reduced tariffs.
• Benefits for British Exports - British exporters will also benefit significantly. The deal is set to ease the sale of whisky, cars, and other British goods in India, helping diversify and broaden the trade portfolio.
• Boost to Bilateral Trade - UK exports to India are projected to grow by nearly 60%, contributing an additional £15.7 billion by 2040. Overall bilateral trade is expected to surge by 39%, adding £25.5 billion annually compared to trade levels in the absence of the agreement.
• Services and Mobility Provisions - The FTA includes chapters on services, innovation, and intellectual property, offering enhanced mobility for Indian professionals.
  • Additionally, a Double Contribution Convention Agreement will prevent Indian workers in the UK from paying into both Indian and British social security systems.
• Strategic Shift after RCEP Exit - India's decision to exit the RCEP in 2019 due to fears of Chinese import surges shifted focus to Western economies. The India-UK deal is part of India’s strategy to forge stronger ties with high-income nations like the UK and EU.

Conclusion

The India–UK FTA marks a pivotal shift in India’s global trade posture. It not only strengthens bilateral relations but also signals India's readiness to engage in complex, high-standard economic agreements aligned with its broader goals of export growth, services integration, and global competitiveness.