UK–India Trade Pact Signed: A Framework for 21st Century Commerce
On 24 July 2025, India and the United Kingdom signed the Comprehensive Economic and Trade Agreement (CETA), establishing one of the most comprehensive trade partnerships between a developed and a developing economy in recent history. The agreement reflects growing economic engagement between two countries with strong historical ties and expanding commercial interests.
The deal followed 14 rounds of negotiation and outlines commitments across goods, services, digital trade, investment cooperation, and intellectual property, with an emphasis on balanced development and long-term trade facilitation.
Key Features of the Agreement
Tariff Elimination: Over 99% of Indian exports to the UK will become tariff-free, and tariffs on UK goods imported into India will be significantly reduced across categories such as machinery, electronics, and beverages.
Projected Gains: Official estimates suggest the agreement may contribute approximately £4.8 billion to UK GDPand ₹42,000 crore (approx. £5.1 billion) to India’s economy annually over the long term.
Digital and Innovation Chapters: The agreement includes modern provisions on e-commerce, digital signatures, cybersecurity standards, and data flow protections, encouraging smoother cross-border technology exchange.
SME Support and Skill Mobility: Special provisions support small and medium-sized enterprises (SMEs) and professional mobility, enhancing bilateral engagement in sectors such as textiles, IT, design, and engineering.
Sectoral and Regional Benefits
Several Indian states stand to benefit from increased market access in key export sectors:
Textiles and Apparel: Major production hubs like Tiruppur, Ludhiana, and Surat may see increased orders due to reduced tariffs and simplified compliance mechanisms.
Gems and Jewellery: With the UK being a key market, exporters from Gujarat and Maharashtra could see improved competitiveness.
Services and Technology: Indian IT, legal, and education services will have greater clarity and opportunity under improved professional mobility frameworks.
On the UK side, whisky, automobiles, advanced machinery, and educational services are likely to benefit from preferential access and reduced customs duties in India.
Institutional Mechanisms
The agreement introduces a Joint Committee and working groups to manage implementation, resolve disputes, and ensure transparency. It includes mutual commitments to environmental standards, gender equality promotion, and technical cooperation without compromising national policy sovereignty.
Future Outlook
While the agreement does not resolve every pending issue in investment protection or cross-border taxation, it establishes a structured and phased approach to further dialogue. Ratification processes in both countries are underway, and implementation is expected in early 2026.
Trade analysts view the deal as a model for balanced and modern FTAs, particularly among countries seeking to balance development needs with global competitiveness.
References
Government of India & Department for Business and Trade, UK. Joint Summary of the UK–India Free Trade Agreement, 2025.
NITI Aayog. India’s Trade Partnerships: A Sectoral Review, 2024.
UK Department for International Trade. Impact Assessment Report: UK–India CETA, 2025.
WTO Trade Policy Review Mechanism. Bilateral and Regional Agreements: Trends and Lessons, 2023.
About the Author:
This article was written for The Hind, a research and cultural lab under The Hind School, dedicated to advancing field-based inquiry and India-centred scholarship.
