India–UK sign Comprehensive Economic and Trade Agreement (CETA)

26.07.2025

India–UK sign Comprehensive Economic and Trade Agreement (CETA)

Context

India and the United Kingdom recently signed a landmark Comprehensive Economic and Trade Agreement (CETA) and endorsed the India–UK Vision 2035. This pact aims to deepen cooperation in trade, mobility, technology, education, climate action, and defence, placing India–UK ties on a long-term strategic footing.

About the Agreement

• Zero-duty access on 99% tariff lines for Indian exports to the UK.
   
• Agreement covers goods, services, mobility, investments, and social security exemptions.
   
• Designed to uplift MSMEs, labour-intensive sectors, and women and youth entrepreneurs.
   
• Vision 2035 outlines collaboration in growth, technology, defence, climate, and education.
   

Key Characteristics of CETA

• Tariff Reduction: 70% tariffs reduced to 0% for processed food, textiles, leather, and marine products.
   
• Professional Mobility: Eased visa rules for Indian professionals, especially in IT and education sectors.
   
• Social Security Relief: Indian workers exempt from UK social security payments for up to 3 years.
   
• SME Support: Dedicated SME channels, digital trade, and paperless customs for efficient exports.
   
• Services Trade: Boost to Indian services in finance, law, architecture, and consulting.
   
• Market Access: Entry into UK’s $63.4 billion agriculture market, excluding sensitive sectors like dairy.
   

Challenges

• Sensitive Sectors: Dairy and agriculture partially excluded due to domestic interest concerns.
   
• Implementation Delays: Technical bottlenecks in mutual qualification recognition and visa systems.
   
• Geopolitical Risk: UK’s policy shifts or India’s electoral changes may slow policy continuity.
   
• MSME Preparedness: Small firms may lack the infrastructure to compete globally without active support.
   

Way Forward

• Awareness Drives: Train MSMEs on export procedures and digital trade compliance.
   
• Institutional Mechanisms: Set up joint regulatory boards to handle technical barriers in services.
   
• Sectoral Schemes: Introduce PLI-like incentives for UK-specific export sectors like food and garments.
   
• Academic Partnerships: Fast-track dual degree and Green Skills initiatives to meet future job demands.

Conclusion

The India–UK CETA and Vision 2035 represent a strategic leap in bilateral cooperation. By integrating trade liberalisation, mobility, climate goals, and technological innovation, the agreement not only boosts India's global standing but also ensures inclusive growth, especially for youth, MSMEs, and skilled professionals.