06

On July 24, 2025, the India-UK Comprehensive Eco-nomic and Trade Agreement (CETA), also referred to as a Free Trade Agreement (FTA), was formally signed in London in the presence of Indian Prime Minister Narendra Modi and British Prime Minister Keir Starmer. The agreement, concluded after three years and 14 rounds of negotiations, marks a significant milestone in bilateral relations.

Under the pact, the UK granted duty-free access to 99% of Indian exports, particularly benefitting sectors such as textiles, leather, footwear, marine products, jewellery, engineering goods, and auto components—all of which previously faced tariffs of up to 20%. Additionally, 95% of India’s agricultural exports to the UK—including fruits, vegetables, grains, spices, and fruit pulp—will now enter duty-free, with projections of a 20% increase in exports over the next three years.

In return, India agreed to reduce tariffs on 85% of UK goods, with 85% of tariff lines becoming duty-free within a decade. Duties on whiskey and gin will fall from 150% to 75%, and further to 40% over ten years. Similarly, tariffs on UK automobiles will decline from 100% to 10%, while levies on soft drinks, beauty products, chocolates, biscuits, salmon, medical devices, and silver will also be eased—making these goods more accessible to Indian consumers.

The agreement also improves mobility for Indian professionals—including chefs, yoga instructors, and musicians—seeking to work in the UK. A notable provision exempts temporary workers from social security contributions for up to three years. Both countries have set an ambitious target to double bilateral trade—from the current $56 billion to $112 billion—by 2030.

India-Uk Trade Agreement: A convergence of interests

The trade deal comes at a pivotal time for both nations. Following Brexit in 2020, the UK was eager to strengthen trade relationships outside the European Union. With its strengths in services (financial, legal, education) and high-value manufacturing (premium cars, medical devices, spirits), the UK viewed India—a fast-growing economy with a vast consumer base—as an ideal partner.

For India, the deal represents an opportunity to secure duty-free access for labour-intensive exports and to create more employment. Additionally, India aimed to expand work oppor-tunities for its skilled professionals in the UK while attracting increased foreign investment. The agreement materialized due to this strong complementarity in economic priorities.

Both nations approached negotiations pragmatically, steering clear of red-line issues that could have derailed the deal. India safeguarded its sensitive agricultural sectors—such as dairy, grains, fruits, vegetables, and edible oils—by maintaining existing tariffs, thus protecting domestic farmers. Simultaneously, the UK secured reduced tariffs on key exports, including whiskey and luxury cars. This balance of interests fostered trust and enabled meaningful compromise.

Beyond trade in goods, the agreement made significant strides in services. A major highlight is the “double contribution convention,” which exempts short-term overseas workers from paying social security in both countries—easing the financial burden on professionals and employers alike.

The global economic backdrop also shaped the urgency of the pact. In a climate of rising protectionism and economic uncertainty, both India and the UK sought to reinforce their global trade footprints. Their shared commitment to open, rule-based trade gave momentum to the deal and strengthened mutual economic resilience.

India-Us Trade Agreement: A divergence of interests

In stark contrast, the India-US trade negotiations remain deadlocked after five inconclusive rounds. The primary sticking point is the US demand for extensive tariff reductions and greater market access—particularly in agriculture. This includes US dairy products and genetically modified (GM) crops such as soybeans and corn. India, however, has deep cultural and religious concerns regarding American dairy products, as well as strict regulatory norms and widespread public opposition to GM crops.

The political sensitivity of agriculture in India further complicates matters. The livelihoods of millions of small and marginal farmers are at stake. India fears that opening its market to heavily subsidized US agricultural products would threaten local farmers and undermine national food security. There is also growing concern about the role of large US corporations—such as Amazon, Walmart, and Costco—potentially dominating procurement and distribution in India’s farm sector. Their bulk purchasing power could squeeze small farmers out of the market, lower incomes, and increase rural distress. Moreover, the potential for such corporations to import US-grown agricultural products into India raises additional alarms.

Compounding the problem is the US’s negotiation style, often driven by the “America First” agenda. Recent US trade agreements—with countries like Bangladesh, Japan, Vietnam, Thailand, Indonesia, and Namibia—have included obligations to purchase US agricultural goods and Boeing aircraft. A similar approach with India has proved unproductive, as India refuses to jeopardize its core interests for unilateral concessions.

Intellectual property rights (IPR) represent another friction point. The US is pushing for stricter IPR enforcement in India’s pharmaceutical and tech sectors, championed by companies like Pfizer and Microsoft. However, India, the world’s largest supplier of generic medicines, is reluctant to adopt rigid patent protections that could drive up drug prices and restrict access to affordable healthcare for its vast population.

Data localization is also a contentious issue. India mandates that sensitive data generated within its borders must be stored on local servers. This policy conflicts with the global data strategies of US tech giants like Google and Amazon, adding yet another layer of complexity to the trade talks.

The Broader Takeaway

The contrast between the India-UK and India-US trade negotiations underscores the importance of shared values, mutual respect, and cultural sensitivity in shaping modern trade relationships. The success of the India-UK pact lies in its collaborative spirit and balanced give-and-take, whereas the failure of the India-US talks highlights the pitfalls of a unilateral, high-pressure approach.

Long-term, sustainable international partnerships must go beyond transactional gains. They should recognize each nation’s unique identity, developmental priorities, and political realities. Any agreement that fails to do so risks being incomplete—and ultimately, unsustainable. For global trade to flourish, trust, fairness, and mutual accommodation must be the guiding principles.