By Dr. Badri Narayanan Gopalakrishnan, Fellow, NITI Aayog.
The recent signing of the India-UK Comprehensive Economic and Trade Agreement (CETA) marks a significant moment in global trade dynamics. While often framed as a mutually beneficial pact, a closer look reveals a narrative where India, with its meticulous negotiation strategy, has secured a highly advantageous deal, and the UK has, perhaps, found a much-needed anchor in its post-Brexit quest for global relevance. This deal also provides a fascinating contrast to the UK’s evolving trade relationship with the US, and India’s own cautious but strategic approach to a potential trade pact with Washington.
The UK’s Post-Brexit Urgency and India’s Strategic Leverage
It is no secret that the United Kingdom has been remarkably keen, even desperate, for this trade deal. Following the labyrinthine and often underwhelming outcomes of Brexit, the UK’s image as a formidable trading nation has taken a considerable hit. The promise of “Global Britain,” articulated during the Brexit campaign, has struggled to materialise into tangible, impactful trade agreements. In this context, the India-UK FTA represents a crucial face-saving opportunity for London, a demonstration that it can indeed forge significant partnerships outside the European Union. This underlying desperation translated into a discernible generosity from the British side during negotiations, allowing India to drive a harder bargain on several fronts.
This eagerness to secure trade deals is also evident in the UK’s recent “Economic Prosperity Deal” (EPD) with the United States, announced in May 2025. While this deal aims to reduce or remove tariffs on key exports like cars, steel, and aluminum, and offers some concessions like a quota for UK automotive imports, it notably emphasizes non-trade agendas, particularly economic security. The EPD includes provisions for cooperation on investment security, export controls, and ICT vendor security, indicating a shift towards strategic partnerships that align with US geopolitical concerns. This suggests a willingness on the UK’s part to make concessions on traditional trade areas in exchange for broader strategic alignment and a perceived “win” in its post-Brexit trade narrative. The pressure on the UK to finalize this deal quickly, driven by the threat of higher US tariffs if an agreement wasn’t reached by a specified deadline, further underscores their urgency in securing trade pacts.
One of the most striking aspects of the India-UK CETA is India’s astute handling of the UK’s persistent “green” and “social” agenda. While the UK’s trade agreements often push for stringent clauses on environmental and labor standards, the India-UK CETA, as seen in Chapter 20 (Labour) and Chapter 21 (Environment), articulates commitments primarily on a “best endeavours basis.” This is a crucial win for India, safeguarding its domestic policy space and allowing it to pursue its developmental priorities without being unduly constrained by external prescriptive standards that might not align with its current economic stage or specific circumstances. This nuanced approach demonstrates India’s growing confidence and strategic maturity in international trade negotiations.
Beyond the immediate economic ramifications, this FTA also holds a unique distinction: it is the first Free Trade Agreement signed by India to explicitly mention gender equity. The inclusion of Chapter 23 (Trade and Gender Equality) in the agreement underscores a progressive step. This dedicated chapter, along with the establishment of a joint working group, signals a commitment to inclusive growth and recognises the vital role women play as workers, business owners, and entrepreneurs in the global economy. This is a subtle yet powerful signal to the world about India’s evolving approach to trade, one that is increasingly holistic and mindful of social dimensions.
The journey to this agreement has been anything but smooth. It has weathered significant political turbulence, including multiple regime changes in the UK, often bringing new negotiating teams and shifting priorities, as well as the 2024 general elections in India, prior to which most of the sensitive FTA talks had to be halted temporarily. Despite these considerable headwinds, the India-UK FTA has emerged as one of the fastest negotiated deals by India, following closely on the heels of its agreements with the UAE, Australia, and the EFTA bloc. This speed, amidst such complexities, is a testament to the dedication of both negotiating teams and, perhaps more importantly, the underlying strategic imperative felt by both nations to conclude this agreement.
India’s Measured Approach to US Trade Negotiations
In stark contrast to the UK’s seemingly urgent pursuit of deals, India’s approach to its ongoing trade deal negotiations with the United States has been marked by caution and a steadfast prioritization of national interests. While discussions are progressing with US negotiators expected to visit India soon, India is treading carefully, learning from complications and unilateral announcements that have affected US agreements with other nations like Japan, Indonesia, and Vietnam. Key sticking points remain, particularly concerning highly sensitive sectors like agriculture and dairy, where India continues to resist opening its markets to protect its farmers and address specific cultural and health concerns, such as those related to US cattle feeding methods.
India’s Commerce and Industry Minister, Shri Piyush Goyal, has emphasized that India will prioritize beneficial terms over strict deadlines in these negotiations. While the US has pushed for a “single overall tariff figure” – similar to the 15% rate agreed with the EU – India’s higher tariff structure presents a more complex challenge. India is seeking preferential market access in the US and the removal of existing reciprocal tariffs on Indian goods, along with eased duties on steel and the auto sector. Discussions also extend to complex areas like digital taxation, where India is advised against accepting unilateral obligations that could set risky precedents. The slow pace on these fronts suggests India’s strong resolve to not be pressured into an agreement that doesn’t fully align with its developmental and strategic objectives.
In essence, the India-UK FTA is more than just a trade pact; it’s a strategic realignment. For the UK, it offers a much-needed success story in its post-Brexit trade narrative and access to a burgeoning Indian market. For India, it is a meticulously crafted agreement that champions its national interests, preserves policy autonomy, and even sets new benchmarks in social inclusivity within trade frameworks. The contrasting approaches evident in the US-UK EPD and the India-US trade negotiations highlight the evolving landscape of global trade, where economic benefits are increasingly intertwined with strategic alignments, and nations like India are demonstrating a clear vision for their place in this complex new order.