India’s Cabinet has given the green signal to the Free Trade Agreement (FTA) with the United Kingdom, known as the Comprehensive Economic and Trade Agreement (CETA). This significant move in India’s trade diplomacy will enhance bilateral trade, reduce tariffs, and promote investment, with the agreement set to be signed during Prime Minister Narendra Modi’s visit to London on July 24, 2025.
Background of the India-UK FTA
- FTA negotiations started in January 2022 post-Brexit to deepen economic ties.
- After rounds of talks, the deal was concluded on May 6, 2025.
- Aligns with India’s strategy for global trade expansion through bilateral agreements.
Significance of the Agreement
- Expected to double bilateral trade to USD 120 billion by 2030.
- Promotes Indian exports like textiles and leather while easing access for British goods.
- Strengthens India’s economic ties with a key G7 nation.
Objectives of the FTA
- Enhance market access for Indian goods and services in the UK.
- Reduce tariffs to boost export competitiveness.
- Strengthen cooperation in innovation, digital trade, and regulatory aspects.
Key Features of the Agreement
- Zero or reduced tariffs on products like leather, garments, and automotive goods.
- Reduction in import duties for UK items such as whisky and high-end cars.
- Chapters on goods, services, intellectual property, government procurement, and innovation.
Expected Impact of the FTA
- Boost Indian exports and reduce trade barriers.
- Enhance employment opportunities, especially in labour-intensive sectors.
- Improve investor confidence and regulatory predictability.
Key Takeaways for Competitive Exams
- India’s approval of the India-UK FTA is a significant step towards boosting bilateral trade and economic ties.
- The agreement aims to double trade to USD 120 billion by 2030, benefiting various sectors like textiles and automotive.
- It strengthens India’s position in global trade and sets a precedent for future FTAs with developed economies.
