Maturing approach: On the India-U.K. Comprehensive Economic and Trade Agreement

The India-U.K. Comprehensive Economic and Trade Agreement (CETA) reflects New Delhi’s more mature approach to free trade negotiations. Unlike its 2009 free trade agreement (FTA) with ASEAN, which tilted the trade balance against India, New Delhi has approached the U.K. pact by attempting to balance liberalisation with domestic sensitivities amid an increasingly fragmented global trading system. A similar shift was evident in the New Zealand FTA , where India succeeded in protecting its sensitive dairy sector despite dairy products being one of New Zealand’s biggest exports. While the India-U.K. CETA is expected to strengthen India’s export competitiveness, its benefits are likely to be uneven across sectors and could place competitive pressure on already cost-disadvantaged MSMEs . The pact, an attempt to secure long-term market access and integrate India further into global value chains, offers zero-duty access on 99% of India’s exports, covering almost the entire value of bilateral trade. However, smaller firms often lack the documentation and compliance capacity needed to claim these benefits. Despite the deal including some agreements on non-tariff aspects, MSMEs may find it difficult to comply with the U.K.’s stringent sanitary, phytosanitary, technical and sustainability standards, which could prove a bigger hurdle than tariffs. Globally, such agreements have accelerated export diversification, attracted investment and facilitated technology transfer, but only when supported by robust industrial ecosystems and competitive firms.