INDIA–UK RELATIONS AND THE COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA)

09.10.2025

INDIA–UK RELATIONS AND THE COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA)

Context
British Prime Minister Keir Starmer’s first official visit to India marks renewed momentum in strengthening India-UK ties through trade, investment, education, culture, and the Comprehensive Economic and Trade Agreement post-Brexit.

Overview of the Visit

• Prime Minister Starmer, now leading the Labour Party, arrived with an extensive 125-member delegation including senior business leaders and heads of academic institutions. The hub of activity is Mumbai, India's financial capital.
• A primary goal is to engage with Prime Minister Narendra Modi to expedite the CETA pact signed in July 2025. The two leaders aim to raise yearly bilateral trade above USD 25.5 billion, in alignment with the “Vision 2035” roadmap which highlights priority sectors for robust cooperation under the agreement.
• For the UK, this partnership represents its most significant trade initiative following departure from the European Union. Demonstrating the importance of cultural diplomacy, the British delegation visited a major Mumbai film studio to announce future UK-based Bollywood film shoots, reinforcing cultural and creative ties.

Key Features of the Comprehensive Economic and Trade Agreement (CETA)
The India–UK CETA establishes a progressive trade structure to enable the smooth movement of goods, services, and investment between both nations.
Objectives include:

• Cutting or removing tariffs on selected goods and services.
• Fostering joint innovation across technology, defence, energy, and research.
• Streamlining trade systems and opening up access for enterprises.
• Encouraging sustainable growth, inventive collaborations, and educational linkages.
  Notably, the agreement comprises mutual recognition of credentials, improved mobility for skilled professionals, and strong safeguards for intellectual property, vital for tech, pharma, and design sectors.

Benefits and Major Areas of Cooperation
CETA is expected to deliver wide-ranging economic and strategic benefits.

For India:

• Broader, low- or zero-duty access to the UK market for key exports such as textiles, leather, jewelry, and manufactured goods.
• Drives foreign investment, highlighted by industry leaders like Rolls-Royce considering India as a global growth center.
• Positions India as a pivotal site in global manufacturing through “Make in India” efforts.

For the UK:

• Greater opportunities in the fast-growing Indian market.
• Enhanced participation in automobile, spirits, education, and healthcare sectors.
• Reaffirms the UK's global economic ambitions after exiting the EU.

Mutual Benefits:

• Cooperation stretches beyond trade, including health, security, clean energy, climate change, and defense.
• Facilitates people-to-people interaction via student, academic, and cultural programs.
• Boosts innovation and digital partnerships across sectors such as fintech and renewables.
  Expectations are for significant job creation and greater business confidence, with the UK acknowledging India’s projected rise to the world’s third-largest economy by 2028.

Understanding Free Trade Agreements (FTAs)
A Free Trade Agreement (FTA) is an accord between two or more countries designed to eliminate or minimize trade barriers on goods and services. FTAs are aimed at promoting competition, lowering costs, and enhancing economic growth.
Core features of FTAs:

• Tariff reduction/removal to make goods cheaper in both markets.
• Simplified customs, easing the process for businesses.
• Enhanced access, boosting exporter and investor participation.
  The main benefit is increased import affordability, encouraging consumer demand, export growth, and innovation.

India’s Trade Pact Landscape
India actively seeks new trade agreements for broader global integration.
Recent or ongoing deals:

• CEPA with UAE (2022), boosting Gulf-region ties.
• Trade agreement with Australia (2022) focused on energy, mining, and education.
• Partnerships with ASEAN and Canada targeting market diversification.
• Negotiations underway with the EU for a large-scale trade pact.

Success drivers for Indian exports under FTAs include tariff reductions, flexible 'rules of origin', eased food and health standards, and improved logistics infrastructure—all supported by robust economic performance of partner countries.

Strategic and Diplomatic Importance
The India–UK collaboration under CETA extends beyond trade, embracing diplomatic and security dimensions.

• The pact enhances India’s role in global economic systems and Asia–Europe trade links.
• For the UK, it represents a critical Indo-Pacific engagement post-Brexit.
• Both nations ramp up cooperation in climate, security, technological innovation, as well as educational and research exchanges, notably with new joint academic programs.

Conclusion
The Comprehensive Economic and Trade Agreement between India and the UK marks a pivotal advancement in bilateral relations, bringing together economic interests and strategic cooperation for mutual growth. The future trajectory, however, hinges on addressing regulatory bottlenecks, promoting fairness, and ensuring inclusive benefits for both societies.