The India-UK Free Trade Agreement (FTA), officially known as the Comprehensive Economic and Trade Agreement (CETA), represents a significant milestone in economic relations between the two countries. The primary goal of this agreement is to increase the volume of bilateral trade by approximately USD 34 billion every year. In addition to this impressive trade boost, the agreement promises improved market access for both Indian and British exporters, paving the way for a stronger and more dynamic economic partnership.
On Friday, the British media responded positively to the signing of the India-UK FTA, portraying it as a notable success. They emphasized the strategic importance of this agreement, particularly highlighting that India is expected to become the world’s second-largest economy after China by the year 2050. Several leading UK newspapers described the deal as a historic opportunity that justifies the efforts put into its negotiation, while also reflecting the potential economic benefits awaiting both nations.
The agreement was formally signed by India's Commerce Minister Piyush Goyal and the United Kingdom's Secretary of State for Business and Trade, Jonathan Reynolds. This ceremony took place in the presence of Indian Prime Minister Narendra Modi and British Prime Minister Keir Starmer. The UK government described the deal as a landmark development that has the potential to safeguard thousands of British jobs and create substantial export opportunities. It was celebrated as a major achievement, especially in the context of the UK's post-Brexit trade strategy.
Many British media outlets framed the agreement as a significant victory following the UK's exit from the European Union. According to them, such a comprehensive deal would not have been possible had the UK remained within the EU’s regulatory and trade framework. Over the years, trade negotiations between India and the EU have faced numerous hurdles, making this bilateral deal with the UK appear even more remarkable.
Images of smiling leaders and ministers were widely shared across British newspapers, reflecting the cordial atmosphere in which the agreement was reached. Prime Ministers Modi and Starmer were pictured enjoying informal moments together, including warm embraces and shared cups of tea at Chequers, the British PM’s countryside residence. This visual representation reinforced the notion of growing trust and friendship between the two nations.
The Daily Express praised the agreement, noting that it serves as evidence that Brexit is working. It pointed out that such a major trade deal was only achievable because the UK was no longer bound by the EU's constraints. The Times, another prominent publication, agreed with this sentiment, stating that the deal was "worth the effort" because it opened the door to one of the world’s fastest-growing and most significant markets.
Interestingly, some articles drew attention to historical context, such as the pre-independence period when Mahatma Gandhi promoted self-reliance by spinning Khadi to resist British imports. Now, the economic roles appear reversed, with India having overtaken the UK in 2022 to become the world’s fifth-largest economy. The agreement reflects this shift in global economic dynamics.
From a practical perspective, the agreement includes substantial tariff reductions. For example, Indian tariffs on British goods are expected to drop on average from 15 percent to just 3 percent. UK ministers believe this could lead to a GDP increase of about GBP 5 billion by the year 2040. Although this figure might seem modest compared to the UK’s total national output of GBP 2.56 trillion, it still symbolizes the strengthening of bilateral ties and hints at the potential for deeper trade cooperation in the future.
However, not all reactions were entirely enthusiastic. The Financial Times noted that the British automotive industry was not fully satisfied with the deal. According to the newspaper, last-minute discussions between London and New Delhi led to compromises that diluted some of the original proposals. Specifically, UK carmakers were disappointed that tariffs on petrol and diesel vehicles would not be reduced to 10 percent until 2031. Moreover, the number of vehicles allowed to be exported to India under these terms will gradually decline between 2031 and 2046.
Despite these concerns, many in the automotive sector remain cautiously optimistic, hoping that gradual tariff reductions will eventually result in stronger market access. The long-term view is that British carmakers will still benefit, even if immediate advantages are limited.
Another key element of the agreement that has raised concerns is the inclusion of the Double Contributions Convention (DCC). This component of the deal allows Indian employees working in the UK—while still employed by Indian companies—to avoid paying UK National Insurance contributions for up to three years. Instead, they will continue to contribute to India's social security system. Similar provisions will apply to UK workers sent to India. While this provision is intended to ease the movement of skilled workers between the two countries, some British media outlets worry it might affect immigration numbers and the domestic job market.
The Daily Telegraph highlighted how the DCC might stir controversy, especially since the Labour government recently increased National Insurance rates for British companies. The concern is that companies might prefer hiring temporary workers under this exemption, potentially undercutting domestic labor. Prime Minister Modi, however, defended the provision by suggesting that it will infuse new energy into the service sectors of both countries and allow the UK to benefit from India’s vast pool of skilled professionals.
The Times expressed a cautious perspective, stating that while the agreement overall is promising, the DCC could result in tension if local workers feel their opportunities are being reduced due to exemptions given to temporary foreign workers. It concluded that although this deal has a silver lining, there remains a “dark cloud” that needs close attention moving forward.
The ultimate aim of the FTA is to double bilateral trade to a total of USD 120 billion by the year 2030. Now that the Indian Cabinet has formally approved the agreement and it has been signed, the next step is for the UK Parliament to ratify the deal. This process could take up to a year, during which further scrutiny and discussions are expected, both within political circles and among the public.
