New Delhi, Jul 24: The long-awaited historical India-UK Comprehensive Economic and Trade Agreement (CETA), signed on July 24 by Prime Ministers Narendra Modi and British Prime Minister Keir Starmer, marks a major milestone in post-Brexit trade diplomacy and India’s global economic strategy.
Negotiated over three years, the deal promises to deepen bilateral economic integration while signalling a broader strategic alignment.
Analysts and political observers say that India stands to gain significantly from improved market access in the UK for key export sectors.
As PM Modi said the agreement opens new doors for “Indian textiles, footwear, gems and jewellery, seafood, and engineering goods,” while also creating opportunities for “agricultural produce and processed food,” the deal is expected to bring new exporters and importers, boost India’s MSME sector, and generate employment, particularly in labour-intensive industries.
The phased reduction of tariffs on goods from 150 percent to 40 percent by 2035 and high-end cars will also encourage competition and consumer choice in India.
A key gain is the Double Contribution Convention, which allows Indian professionals on temporary assignments in the UK to avoid paying social security taxes in both countries, a longstanding demand from Indian businesses.
This will make cross-border movement more cost-effective, especially for tech and service sector firms.
For the UK, the CETA is its most economically significant trade deal since leaving the European Union.
As Starmer put it, “This deal is now signed, sealed, delivered. Britain is open for business.”
UK exporters will benefit from sharply reduced tariffs in the Indian market as average duties on British goods will fall from 15 percent to 3 percent.
Key beneficiaries include manufacturers of medical devices, aerospace components, luxury cars, and cosmetics.
This gives British firms a first-mover advantage in a vast and fast-growing consumer market, as one of the observers said that India is a vast consumer of cosmetics and will massively help US businesspeople to make a good foothold in the Indian markets.
Consumers in India will benefit from the lower sales price. The deal is also expected to create over 2200 British jobs and encourage Indian firms to expand operations in the UK. In education, six UK universities, including the just-started Southampton, will open campuses in India, enhancing soft-power influence and revenue for British institutions. Both countries are leveraging the deal to anchor a broader strategic partnership.
The Vision 2035 roadmap promises deeper cooperation in defence, AI, semiconductors, cybersecurity, and climate change.
Enhanced intelligence sharing and a new criminal records exchange system also mark a step-change in law enforcement collaboration.
However, there are also a few challenges.
Despite its promise, the deal poses some challenges.
The UK had hoped for deeper access to India’s currently restricted legal and financial services sectors.
Negotiations on a separate bilateral investment treaty are ongoing, but the absence of such provisions in this FTA limits its full potential for British service exporters.
There are also concerns over labour competition.
Though UK ministers insist there is no risk of British workers being undercut, critics remain wary.
The exemption from dual social security contributions could be perceived wrongly or rightly as an incentive for importing talent over hiring locally.
There are also some environmental frictions.
India continues to resist the UK’s proposed tax on high-carbon imports, arguing it could penalise Indian exporters unfairly.
This issue could resurface as climate trade policies tighten globally.
Another challenge is delayed implementation.
While the Indian cabinet has cleared the deal, UK parliamentary ratification is pending, and implementation may take up to a year.
Political shifts or economic pressures in either country could slow progress.
However, the CETA continues to be a win-win deal with strategic depth and tangible economic benefits for both sides. India gets greater access to capital, technology, and premium markets while the UK secures a foothold in one of the world’s fastest-growing economies.
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