CURRENT AFFAIRS
CURRENT AFFAIRS
Description
In 2025, India and the United Kingdom reached a landmark trade agreement aimed at strengthening bilateral economic relations amidst rising global geopolitical uncertainties. The Comprehensive Economic and Trade Agreement (CETA) marks a significant step forward, targeting a doubling of trade volume between the two countries by 2030. This historic deal was concluded after more than three years of negotiations.
Main Features Of Agreement
Under CETA, tariff elimination and broader market access are central themes:
99% of Indian exports will now enter the UK duty-free.
The UK will enjoy tariff-free access for 90% of its goods into the Indian market.
Benefiting Indian sectors include:
Textiles
Footwear
Gems and jewellery
Seafood
Engineering goods
On the UK side, products such as aerospace parts and medical equipment will gain easier access to Indian consumers.
The agreement has secured clearance from the Indian Cabinet and now awaits approval by the UK Parliament.
Tariff Concessions And Market Access Expansion
Key tariff changes include:
A gradual reduction in duties on British whisky, from 150% to 40% over a 10-year period.
Automobile import tariffs will drop from up to 110% to 10%, but this will apply under a defined quota system.
Consumer goods like perfumes, soaps, and cosmetics will experience phased tariff reductions.
However, several sensitive categories are excluded:
India has kept products like electric and hybrid vehicles, apples, cheese, gold bars, and smartphones outside the scope of concessions.
The UK has excluded items such as meat, rice, sugar, and eggs from tariff cuts.
Government Procurement And Industrial Impact
A notable provision of the agreement grants UK companies access to India's public procurement market, enabling them to compete for around 40,000 annual tenders worth over £38 billion.
In a significant policy shift:
UK-made goods with just 20% local content can now qualify as Class II suppliers in India.
This category was previously limited to Indian suppliers with 20–50% local content.
The change has sparked concerns about the potential impact on domestic manufacturing goals, particularly under initiatives like ‘Make in India’ and Atmanirbhar Bharat, as it may lead to increased foreign component use.
Labour Mobility And Social Security Reforms
Alongside CETA, both countries signed a Double Contributions Convention, designed to eliminate dual social security payments for professionals over a three-year period.
This provision is expected to benefit around 75,000 Indian professionals working in the UK by lowering their contribution burden and improving labour mobility.
Outstanding Issues And Future Considerations
While CETA makes significant strides, some contentious matters remain unresolved:
India’s concerns over the UK’s Carbon Border Adjustment Mechanism (CBAM), due to be implemented in 2027, were not addressed in the agreement.
The inclusion of phased tariff cuts and selective exclusions indicates a delicate balancing act opening up trade while safeguarding national economic interests.
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