The India-United Kingdom Comprehensive Economic and Trade Agreement (CETA), which came into force on July 15, after three years of negotiations spread over several 14 rounds of talks and 800 technical sessions, will reinstate a close economic cooperation between two major economies — for the first time after the country broke the British colonial yoke in 1947.
The agreement will over a period of time create an $8-trillion free trade region, which will be mutually beneficial to both India and the United Kingdom. As a result of the deal, bilateral trade is expected to rise from £42.6 billion to £75 billion. It will eliminate tariffs for Indian enterprises in labour-intensive businesses such as textiles, marine products, leather, footwear, sports goods, toys, gems, jewellery, engineering goods, auto parts, engines, and organic chemicals.
Though Vietnam and Turkey already have a free trade deal with the British, Bangladesh and Pakistan enjoy nearly zero per cent import duty because of their national economic backwardness, which gives them an immense tariff advantage over Indian products. However, the CETA will eliminate this tariff disadvantage for Indian manufacturers and will allow them to compete fairly with them.
British whisky, gin, medical devices, cosmetics, aerospace components, lamb, salmon, electrical machinery, soft drinks, chocolate, and biscuits will get cheaper. India will also reduce higher tariffs on the import of fossil fuel run automobiles and electric vehicles to 10 per cent in the next five years and 10 years, respectively.
The entry of British automobiles without import duty cover will introduce tough competition for Indian automotive manufacturers. However, the delayed implementation will allow the Indian manufacturers to become globally competitive. The deal will also allow Indian auto parts manufacturers to be part of the British supply chain, and improve their quality.
The social security agreement, which is a part of the deal, will also provide invaluable support to Indian professionals working temporarily in the UK and strengthen the competitiveness of Indian enterprises. The CETA is expected to strengthen key agri-export clusters across Maharashtra, Gujarat, Andhra Pradesh, Tamil Nadu and Punjab, enhancing India’s global export competitiveness.
India currently has free trade agreements with 11 countries. However, in terms of economic size, the CETA is the second biggest after the India-Japan deal. The two biggest upcoming trade deals are with the European Union and the United States. While the EU deal was concluded in January 2026 after two decades of off-and-on talks, negotiations with the United States are stuck on the nitty-gritty of tariff.
When the World Trade Organisation (WTO) regime has become more or less redundant, countries have adopted the negotiated deals with their preferred partner countries as the new strategy. It being the sixth largest economy, every major country would like to have free trade with India. However, the deals will be of no use, unless domestic companies increase standards and become competitive. India should, therefore, develop an ecosystem that supports and encourages domestic manufacturers to improve the quality of their products and services and become unbeatable.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: deccanchronicle.com
