Context: India and the have signed a landmark free trade pact India-UK Comprehensive Economic and Trade Agreement (CETA). It is expected to double bilateral trade to $112 billion by 2030, boost services exports, liberalise government procurement, and facilitate mobility.
Relevance of the Topic : Prelims: Key facts related to India-UK trade deal.Mains: Significance of India-UK trade deal.
Key Highlights of India-UK Comprehensive Economic and Trade Agreement (CETA):
What India Gains?
1. 99% Duty Free Access:
- The UK will eliminate tariffs on about 99% of tariff lines for Indian goods. It will benefit key labour-intensive sectors- marine, textiles, chemicals, base metals. The sectors will now enjoy zero duties, down from rates as high as 20%.
- India has secured duty-free access for sectors like rubber, plastics, auto, tea, coffee, and spices.
- In processed foods, tariffs on 99.7% of lines (presently as high as 70%) have been scrapped.
2. Textiles:
- India’s textiles and clothing sector get duty-free access to over 1100 product categories (E.g., ready-made garments, home textiles, carpets, handicrafts etc.). This does away with the disadvantage on tariff front that India had with countries like Bangladesh and Cambodia.
- With duties removed, India is expected to gain at least 5% more market share in the UK within the next one to two years.
3. Agriculture:
- Many agricultural and processed foods, including fruits, vegetables, cereals, spices like turmeric and pepper, and items like mango pulp, pickles, and pulses will get duty-free access to the UK.
- Over 95% of tariff lines will be duty free, which is likely to boost agri exports by over 20% in three years. This will support India's goal of $100 billion agri-exports by 2030.
- The FTA protects India’s sensitive sectors like dairy, apples, oats, and edible oils.
4. Marine Products:
- Tariffs have been removed on key items like shrimp, tuna, fishmeal, and feeds- previously taxed between 4.2% and 8.5%. No tariffs for India’s marine products creates a $5.4 billion marine export opportunity for India.
5. Engineering:
- India’s engineering exports to the UK will have duty-free access. With tariffs (presently up to 18%) gone, exports could nearly double to over $7.5 billion by 2029-30.
6. Pharmaceuticals:
- The FTA does away with tariffs on generic medicine, thus enhancing their competitiveness in the UK, which is India’s largest pharmaceutical market in Europe.
- Medical devices such as surgical instruments, diagnostic equipment, ECG machines, and X-ray systems will now enjoy zero-duty access, making Indian products more cost-effective and attractive in the UK market.
7. Chemicals and Plastics:
- India’s chemical exports to the UK may rise by 30-40%, estimated to reach $650-750 million in 2025-26.
- The FTA gives duty-free access to plastics, and thus opens up strong opportunities in high-demand segments like films, sheets, pipes, and kitchenware in the UK.
8. Sectoral Boost:
- Leather: In leather and footwear, the FTA does away with the 16% tariffs. It will add 5% market share in 1-2 years, and benefit MSME hubs like Agra, Kanpur, Kolhapur, and Chennai.
- Gems and jewellery export is projected to double in 2-3 years as the FTA opens access to the UK’s $3 billion jewellery market.
- India’s sports goods exports like soccer balls, cricket gear, rugby balls, and non-electronic toys will grow, boosting competitiveness against countries like China and Vietnam.
9. Benefits for Indian Professionals:
- Double Contribution Convention: Indian professionals working temporarily in the UK will be exempt from paying social security for up to three years, reducing the financial burden on both employees and employers.
- No Economic Needs Test: The FTA grants access to 36 service sectors without an Economic Needs Test for Indian firms and freelancers.
- Indian professionals can now work in as many as 35 UK sectors for up to 2 years, even without the need for a local office.
What UK Gains?
- India will reduce import tariffs on 90% of UK tariff lines, with 85% becoming fully tariff-free within 10 years.
- India has cut tariffs on aerospace, automobiles, and electrical machinery with reductions ranging from as high as 110% and 11% to just 10% and 0%.
- The import duties on UK-produced whisky and gin are lowered from 150% to 75% immediately, and will be followed by a further decrease to 40% within a decade.
- The UK businesses will gain expanded access to public procurement opportunities in India. British companies will be able to bid on non-sensitive government tenders valued above Rs 2 billion.
- The UK will be able to create over 2,200 jobs as a direct result of the trade agreement.
- British consumers will benefit from cheaper prices and more choices on clothes, shoes, and food products.
The bilateral trade between the two countries stood at nearly USD 56 billion in FY2025. The deal will bring huge benefits to both our countries, boosting wages, raising living standards and putting more money in the pockets of working people.
The India-UK CETA will be implemented, once it is approved by the British Parliament, which may take a year or more.