Why in News: India and the U.K. signed a Free Trade Agreement (FTA) on July 24, 2025, during PM Modi’s U.K. visit. While the deal promises economic benefits, experts warn of public health risks.
Key Health Concerns Raised:
- Cheaper HFSS imports (biscuits, chocolates, soft drinks) may worsen India’s lifestyle disease burden.
- Mexico’s NAFTA experience showed a similar pattern—rise in obesity and diabetes due to lack of safeguards.
- India lacks strong regulations on HFSS food advertising and labelling, relying on ineffective self-regulation.
- Delay in implementing Front-of-Pack Warning Labels; the current “star rating” system is misleading.
- Celebrity endorsements and poor enforcement normalize junk food, especially among children.
Ways to manage health concerns:
- Implement clear warning labels on HFSS products.
- Ban HFSS ads targeting children.
- Regulate junk food in school canteens.
- Integrate public health safeguards in future FTAs (e.g., TEPA).
- Involve health experts in trade policymaking.
India–U.K. FTA: Significance
1. Preferential Market Access
- Tariffs slashed on 99% of Indian exports and 90% of U.K. goods.
- Boost to textiles, gems & jewellery, auto parts, marine products.
- Targets doubling trade from $60 bn to $120 bn by 2030.
2. Services & Mobility
- Indian firms in IT, finance, education gain U.K. access.
- Simplified visas and 3-year social security exemption save ₹40 bn annually.
3. Jobs & Exports
- Textiles may grow by 30–45% ($500–800 mn).
- Jewellery exports may rise to $1 bn, boosting employment.
4. Sectoral Safeguards
- Auto tariffs drop from 100%+ to 10% with quotas.
- Dairy and agriculture remain protected.
5. Institutional Oversight
- Joint FTA committee ensures transparency, barrier resolution, and sustainability focus.
6. Strategic Importance
- Sets benchmark for future FTAs (EU, US, ASEAN).
- Supports Make in India and value-added exports.
India–UK FTA: Key Challenges
- Trade Imbalance: Imports from FTA partners rose 82% (2017–22), exports only 31%. FTA utilisation remains low (~25%).
- Competitive Pressure: Indian textiles and electronics face cost and innovation gaps vs ASEAN, Korea. Inverted duty structure adds burden.
- Non-Tariff & Carbon Barriers: EU’s CBAM and technical standards may hurt $8 bn in exports (textiles, leather).
- Complex Compliance: MSMEs struggle with rules of origin, certifications, and lack of awareness.
- IPR Concerns: Western FTAs demand stricter IP norms, threatening India’s pharma sector.
- Agriculture & MSME Risks: Fear of being undercut by cheaper UK imports (lamb, salmon, processed foods).
- Strategic Balance Needed: Sensitive sectors like dairy, auto need protection with strong monitoring.
Enhancing India’s FTA Effectiveness
PLI-FTA Alignment
- Link ₹1.97 lakh crore PLI scheme with FTA negotiations
- Secure preferential access for PLI sectors (electronics, pharma, auto)
Export Infrastructure
- Build sector-specific industrial clusters
- Integrate supplier development and skills training
MSME Enablement
- Create regional MSME export centers
- Provide rules-of-origin and trade finance guidance
- Use digital outreach for rural exporters
Services Leverage
- Prioritize IT, BPO, healthcare, education services
- Negotiate visa facilitation and professional recognition
- Include tech collaboration provisions
UPSC RELEVANCE
GS Paper 2 – International Relations
- Bilateral Relations: Strengthens India–UK ties under the Roadmap 2030.
GS Paper 3 – Indian Economy
- External Sector: Trade liberalisation impact on exports, MSMEs, tariffs.
Mains Practice Question
Q. The India–UK Free Trade Agreement is not just about tariff reduction; it is a strategic recalibration in a post-Brexit world.” Discuss the key features of the agreement and critically examine its economic, geopolitical, and regulatory implications for India. (250 words)