Elizabeth Roche
India and the United Kingdom signed a landmark trade pact, the Comprehensive Economic and Trade Agreement (CETA), during Prime Minister Narendra Modi’s visit on July 23-24. The pact opens a new chapter in bilateral economic relations against the backdrop of rising geopolitical uncertainty and economic flux stemming from the U.S. announcement of unilateral tariffs.The agreement, which contains almost 30 chapters, has been described as “forward-looking” and the “largest” India has negotiated in terms of complexity and depth. It covers trade in goods and services, telecommunications, digital trade, financial and professional services, labor mobility, environment, and social issues like labor rights and development cooperation, as well as support for small and medium enterprises.
Hailing the agreement as a “blueprint for shared prosperity,” Modi said that it would reduce the “cost of doing business” and enhance “confidence of doing business” between the two economies, even as it strengthens the global economy.U.K. Prime Minister Keir Starmer described the CETA as “historic” and pointed out that it would “boost wages and living standards” in the two countries. “It will bring down the prices of Indian clothes, shoes, foods for British citizens,” he said.
The agreement with the U.K., the world’s sixth-largest economy, is particularly significant for India as its pacts with two other major developed economies, the U.S. and the European Union (EU), are still under negotiation. The CETA could therefore serve as the template in these negotiations.In addition, India’s deal with the U.K. would help undercut arguments that paint India — the world’s fourth largest economy — as isolationist or obstructive when it comes to trade matters. U.S. President Donald Trump has frequently called India a “tariff king” – a scathing commentary on what he views as India’s high tariffs protecting its domestic markets and industries.
Days after the CETA was signed, Indian Commerce Secretary Sunil Barthwal pointedly said that India was capable of facing competition and was not a “tariff king,” with average tariffs for the U.K. set to drop to 3 percent from the current 15 percent.With India’s economic profile rising, the Indian government would like to be seen as trade-friendly, welcoming of investors, and an easier place to do business. India’s budget 2025-26 contained a slew of measures, including the setting up of a new committee to review regulatory reforms in the non-financial sector with the aim of strengthening trust-based economic governance to improve ease of doing business.
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