In News:

The India–UK Comprehensive Economic and Trade Agreement (CETA) officially came into force on 15 July 2026, marking a new phase in bilateral economic relations between the two countries.

What is India–UK CETA?

• The India–UK Comprehensive Economic and Trade Agreement (CETA) is a comprehensive bilateral Free Trade Agreement (FTA) aimed at liberalising trade in goods, services, investment, and professional mobility. It seeks to enhance market access, reduce trade barriers, strengthen supply chains, and expand economic cooperation.
• The agreement aims to double bilateral trade from about US$56 billion by the end of the decade, while promoting investment, technology collaboration and employment generation.

Key Features of CETA

Duty-Free Market Access

• The UK has provided zero-duty access on nearly 99% of India's export tariff lines, covering almost the entire value of India's merchandise exports to the UK. This is expected to significantly benefit labour-intensive sectors such as textiles, garments, leather, footwear, marine products, engineering goods, pharmaceuticals and auto components.
• The agreement also removes the tariff disadvantage that Indian exporters earlier faced vis-à-vis countries such as Bangladesh, Pakistan and Cambodia, which already enjoyed duty-free access to the UK market.

Market Access for Services

• India secured improved access across 12 major services sectors and 137 sub-sectors, including information technology, finance, education and professional services. Both countries also agreed to conclude Mutual Recognition Agreements (MRAs) for professional qualifications in sectors such as nursing, architecture and accountancy, facilitating easier mobility of skilled professionals.

Double Contribution Convention (DCC)

A major achievement is the Double Contribution Convention (DCC), under which Indian professionals temporarily working in the UK will be exempt from paying British National Insurance contributions for up to 60 months, preventing double social security payments. This is expected to benefit around 75,000 Indian professionals and nearly 900 companies, generating savings of around US$600 million annually.

Calibrated Market Opening by India

India has agreed to gradually reduce tariffs on selected British products:

• Import duty on British passenger vehicles will decline from around 110% to 10% over ten years under a quota of 37,000 Completely Built Units (CBUs) annually.
• Customs duty on Scotch whisky will be reduced in phases from 150% to 40% over a decade.

The phased approach seeks to protect domestic industries while promoting greater competition and consumer choice.

In News:

India and the United Kingdom signed the Comprehensive Economic and Trade Agreement (CETA) in July 2025, marking a landmark Free Trade Agreement (FTA) between India and a major developed economy. The agreement is part of the broader India–UK Vision 2035, aiming to strengthen bilateral ties across trade, technology, defence, climate, and education.

Key Features of CETA

1. Trade in Goods

• Zero-duty access for 99% of Indian exports to the UK, covering major sectors:
  • Labour-intensive: textiles, leather, footwear, gems & jewellery, toys, marine products.
  • High-growth: auto components, engineering goods, organic chemicals.
• Improved access for Indian agricultural products (tea, spices, coffee, fruits, meats) to UK’s $63.4 billion agri-market (dairy excluded).

2. Trade in Services

• First-of-its-kind comprehensive services commitment by the UK.
• Expands Indian access in: IT/ITeS, financial & legal services, architecture, education, telecom, consulting, and engineering.

3. Labour Mobility

• Liberalised visa norms for:
  • Contractual Service Suppliers
  • Intra-Corporate Transferees
  • Independent Professionals (e.g. chefs, yoga instructors, musicians)
• Double Contribution Convention (DCC):
  • Exempts Indian professionals and their employers from UK social security contributions for up to 3 years.

4. Inclusive Growth

• Benefits designed for MSMEs, women entrepreneurs, artisans, farmers, and startups.
• Provisions include:
  • Dedicated SME contact points
  • Digital trade facilitation
  • Paperless customs

India–UK Vision 2035: 5 Strategic Pillars

1. Growth and Jobs

• Target: Double bilateral trade from USD 56 bn to USD 112 bn by 2030.
• Initiatives:
  • New Bilateral Investment Treaty (BIT)
  • UK–India Infrastructure Financing Bridge
  • British International Investment (BII)
  • Regulatory harmonisation in legal and financial services.

2. Technology and Innovation

• Focus Areas: AI, 6G, semiconductors, biotech, cybersecurity, biomaterials.
• Key Initiatives:
  • Joint AI research centre
  • India–UK Critical Minerals Guild
  • Startup collaboration via incubators and biofoundries.

3. Defence and Security

• Launch of 10-Year Defence Industrial Roadmap: R&D in electric propulsion, underwater warfare, directed energy weapons.
• Deepening:
  • 2+2 Ministerial Dialogue
  • Military exercises, intelligence sharing
  • Indian Ocean logistics cooperation

4. Climate and Clean Energy

• Areas of Collaboration: Offshore wind, small modular nuclear reactors (SMRs), carbon markets, blue carbon research.
• Joint commitment to:
  • International Solar Alliance (ISA)
  • One Sun One World One Grid (OSOWOG)
  • Net Zero Innovation Partnership

5. Education and People-to-People Ties

• UK universities allowed to open campuses in India.
• Launch of dual degree programmes, mutual qualification recognition.
• Young Professionals Scheme for career mobility.
• Green Skills Partnership to bridge climate tech skill gaps.

Strategic Importance for India