India-UK Free Trade Agreement

Source: Indian Express
GS II: Bilateral, Regional, and Global Groupings and Agreements involving India and/or affecting India’s interests

Overview

1. News in Brief
2. Key Features of the Agreement
3. Concerns and Challenges
4. Way Forward

Why in the News?

The India-UK Comprehensive Economic and Trade Agreement (CETA) will come into effect on 15th July 2026.

News in Brief

• India and UK have finalized the Comprehensive Economic and Trade Agreement (CETA), which is a landmark Free Trade Agreement.
• It aims to boost bilateral trade, investment,  employment and mobility of professionals between India and the United Kingdom.
• It is expected to expand market access, increase exports, attract investments, create jobs, and strengthen economic cooperation between the two countries.

Key Features of the Agreement

Export Expansion

• Duty- free access for a large share of Indian exports.
• Enhanced competitiveness of Indian products in the UK market.
  • Ensured gradual opening up of domestic markets.
  • Encourage local manufacturers to produce high quality goods in competitive prices, which is a key element of Viksit Bharat Mission.
• Greater opportunities for labour- intensive sectors.

Boost to Agriculture

• Increased exports of processed and value-added agricultural products.
• Improved income prospects for farmers.
• Expansion of agricultural value chains.

Manufacturing Growth

• Benefits for textiles, leather, footwear, gems and jewelry, sports goods, and toys.
• Increased production and employment generation.

Services Sector Advantages

• Wider market access for Indian service providers.
• Growth opportunities in IT, healthcare, education, finance, and professional service.

Double Contribution Convention (DCC)

• Exemption from dual social security contributions.
• Applies to employees temporarily working in the UK.
• Easier movement of professionals and business personnel.
• Improved opportunities for Indian talent in international markets.

Investment Promotion

• Strengthened investor confidence.
• Increased foreign direct investment (FDI)
• Technology transfer and innovation benefits.

Concerns and Challenges

• Increased Foreign Competition
  • Domestic industries may face competition form imported products.
  • Smaller firms may struggle to adapt.
• Regulatory Compliance
  • Indian exporters must meet stringent quality and sustainability standards.
• Utilization Challenges
  • Many MSMEs lack awareness regarding FTA provisions.
  • Limited export readiness may reduce benefits.
• Trade Imbalance Risks
  • Higher imports could affect some domestic sectors if competitiveness is not enhanced.

Way Forward

• Strengthen export infrastructure
• Improve quality certification systems.
• Promote awareness among MSMEs.
• Enhance skill development and innovation
• Facilitate easier access to finance for exporters.
• Build resilient supply chains.

Key Takeaways

UPSC Prelims Practice Question

Consider the following statements

1. 1. The Double Contribution Convention aims to prevent Indian professionals on temporary assignments from making dual social security contributions.
   2. The India-UK Comprehensive Economic and Trade Agreement provides tariff -free access to nearly all Indian exports entering the UK market.
   3. It is regarded as one of India’s most significant trade agreements with a developed economy.

Which of the above statements are correct?

a) 1and 2 only

b) 2 and 3 only

c) 1and 3 only

d) 1,2 and 3

Answer: d) 1,2 and 3

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