Editorial: Finally, UK-India clinches trade deal
The sweeping access granted to the UK must not set a precedent for FTAs with larger economies like the EU or the US
After three years of hard negotiations, India and the United Kingdom have finally inked a landmark free trade agreement that is expected to boost bilateral trade between the two economies by USD34 billion annually. The agreement was signed in London in the presence of visiting Prime Minister Narendra Modi and his British counterpart Keir Starmer. The Comprehensive Economic and Trade Agreement (CETA) comes at a time when global markets are grappling with uncertainty and volatility in the wake of United States President Donald Trump’s shenanigans. The deal, the biggest signed by Britain after leaving the European Union nearly five years ago, promises to enhance bilateral trade, provide Indians with greater access to British products, ranging from cosmetics to cars and premium whiskey, and allow for tariff-free access to 99 per cent of Indian imports to the UK. It will bring significant benefits to India by opening new avenues of growth, skill development, and employment opportunities for Indians across multiple sectors. The negotiations for a trade deal continued under three different British Prime Ministers from 2022 to 2025 and several deadlines were missed. The agreement has finally materialised after the Starmer-led Labour Party won a landslide victory in May 2025. As per the agreement, the UK will eliminate import duties of up to 20 per cent on job-creating sectors such as textiles, footwear, gems and jewellery. Indian food sectors, including seafood, dairy, and meat, will enjoy zero duties. Tariffs on tea and coffee have also been scrapped.
For the first time, India will allow British firms to participate in government tenders, giving them Class Two status under ‘Make In India’ rules, which require 20-50 per cent domestic value addition. This is the most extensive concession in government procurement that India has offered in any FTA till now and marks a strategic shift away from using public procurement as a tool for domestic industrial development. There are concerns that the sweeping access granted to the UK could set a precedent for future FTAs with larger economies like the EU or the US, potentially eroding India’s ability to use public procurement as a lever for policy goals such as import substitution, domestic capacity-building, and employment generation. The government needs to address these concerns. Also, India seems to have conceded significantly on Intellectual Property Rights (IPR), as UK patent holders are now allowed to give voluntary licences, representing a marked shift from the earlier stance. India has also halved the import tariffs on Scotch whiskey, giving Scotch distillers access to the world’s largest whisky market by volume. Indian professionals will now be able to work in 35 sectors in the UK for two years even without an office in the country. This move could benefit more than 60,000 IT professionals each year. Also, Indian professionals will be exempted from UK social security payments for three years under the agreement.
