Why in News: India and the U.K. signed the Comprehensive Economic and Trade Agreement (CETA) in July 2025, marking a major step to deepen bilateral trade, investment, and strategic cooperation.
Background and Context
- India–U.K. relations deepened with the signing of the Comprehensive Economic and Trade Agreement (CETA) in July 2025.
- British PM Keir Starmer’s Mumbai visit marks renewed strategic engagement.
- The pact comes amid fragmented global trade regimes and shifting geopolitical alignments.
- India’s growing network of trade deals — like TEPA with EFTA — reflects its outward trade posture.
- Both nations aim to transform ties into a comprehensive strategic partnership anchored in economy, defence, and technology.
Core Features of CETA
- Seeks to double bilateral trade by 2030, building on the $20+ billion trade base.
- Tariff reductions: Indian exports (textiles, agri-products, pharma) gain access; U.K. exports (Scotch, autos, machinery) become cheaper.
- Regulatory cooperation to harmonize standards and reduce non-tariff barriers.
- Services and mobility facilitation, aiding Indian IT, healthcare, and financial sectors.
- Inclusion of investment and digital trade provisions, making the deal forward-looking and comprehensive.
Complementary Initiative
- Double Contributions Convention (DCC): Exempts Indian professionals from double social security payments for 3 years.
- Bilateral Investment Treaty: Expected to increase U.K.’s FDI beyond its current 5% share.
- Vision 2035 Roadmap: Framework for cooperation in defence, climate, education, and mobility.
- Defence Industrial Roadmap (2025): Focus on joint design, production, and supply chains.
- Technology Security Initiative (2024): Collaboration in AI, quantum tech, semiconductors, and critical minerals.
Strategic and Economic Significance
- For India: Enhanced technology access, job creation, and integration with European supply chains.
- For the U.K.: Access to India’s large market, digital innovation ecosystem, and Indo-Pacific reach.
- Reinforces trust-based economic and security cooperation in an era of multipolarity.
- Expands collaboration in green finance, renewable energy, and digital trade.
- Enhances both nations’ status as key players in rule-based global trade architecture.
Way Forward
1. Harmonise regulatory frameworks to ensure smooth implementation of CETA.
2. Promote joint R&D and innovation hubs in emerging technologies.
3. Focus on sustainability-linked investments in clean energy and green manufacturing.
4. Expand mobility and education exchanges to build human capital linkages.
5. Create sectoral synergies in EVs, aerospace, digital finance, and higher education to build an enduring partnership.
UPSC Relevance
GS Paper II – International Relations:
- India’s bilateral relations and strategic partnerships; foreign trade agreements; role of economic diplomacy.
Mains Practice Question
Q1. Discuss the significance of the India–U.K. Comprehensive Economic and Trade Agreement (CETA) in redefining bilateral relations in the changing global trade landscape. (Answer in 250 words)