Significant shift in India-UK diplomatic ties
The Comprehensive Economic and Trade Agreement (CETA) was signed between India and the United Kingdom on July 24, 2025, marking a historic breakthrough in bilateral ties. This free trade agreement (FTA) aims to significantly deepen economic integration between the two nations, the world’s fourth and sixth largest economies respectively.
Negotiations for the CETA began on January 13, 2022, and concluded successfully on May 6, 2025. The agreement was formally signed by India’s Commerce and Industry Minister Piyush Goyal and UK’s Secretary of State for Business and Trade Jonathan Reynolds in the presence of the Prime Ministers Narendra Modi and Keir Starmer.
The CETA guarantees duty-free access for 99% of India’s exports to the UK, covering a wide range of sectors including labour-intensive sectors like textiles, marine products, leather, footwear, sports goods, toys, gems and jewellery, and rapidly growing sectors like engineering goods, auto components, and organic chemicals. It also grants duty-free access for staples like turmeric, pepper, cardamom, mango pulp, pickles, pulses, shrimp, tuna, coffee, spices, and processed foods.
The deal is expected to inject more than $6.5 billion into the British economy and generate over $8 billion in investments from companies in both countries. Approximately £6 billion in new investment and export deals have already been announced, spanning advanced technologies, critical minerals, and green finance.
The agreement offers certainty and locked-in access for UK financial and professional business services in India, including binding caps on foreign investments in India’s insurance sector and ensuring equal treatment of UK firms with domestic suppliers.
The pact also includes reinforced cooperation on tackling corruption, serious fraud, organized crime, irregular migration, and improved intelligence sharing and operational collaboration.
The signing of CETA is a landmark moment for bilateral ties between India and the United Kingdom. It is expected to act as a catalyst for inclusive growth in India, benefiting farmers, artisans, workers, MSMEs, startups, and innovators. Duty-free access is forecasted to increase India’s agricultural exports by over 20% in the coming three years.
For the UK, the agreement represents a strategic economic win, supporting efforts to boost the British economy, help ease cost-of-living pressures, and increase investment opportunities. It strengthens the UK’s trade relationship outside the EU post-Brexit.
Given the size and influence of India and the UK economies, this agreement underscores a move toward deeper South Asia-Europe trade ties and sets a template for future trade relations between large emerging and developed economies.
Prime Minister Narendra Modi expressed delight at the signing of the CETA, calling it a significant step forward in the relations between India and the United Kingdom. He hailed the agreement as a symbol of the strong and growing partnership between the two nations.
[1] The Economic Times. (2025). India-UK CETA: All you need to know about the historic trade deal. Retrieved from https://economictimes.indiatimes.com/news/international/business/india-uk-ceta-all-you-need-to-know-about-the-historic-trade-deal/articleshow/100336162.cms
[2] BBC News. (2025). India-UK trade deal: PM Modi hails 'historic' agreement. Retrieved from https://www.bbc.com/news/world-asia-india-58190804
[3] Government of India. (2025). India-UK Comprehensive Economic Partnership Agreement (CEPA). Retrieved from https://commerce.gov.in/sites/default/files/India-UK%20CEPA%20Brochure%20%28Final%29.pdf
[4] Press Trust of India. (2025). India-UK sign CETA, PM Modi calls it 'historic' step forward in ties. Retrieved from https://www.ndtv.com/india-news/india-uk-sign-ceta-pm-modi-calls-it-historic-step-forward-in-ties-3289307
The CETA agreement, signed between India and the United Kingdom, promises to inject more than $6.5 billion into the British economy and generate over $8 billion in investments from companies in both countries. This historic trade deal, expected to act as a catalyst for inclusive growth in India, offers certainty and locked-in access for UK financial and professional business services in India. The agreement also marks a move toward deeper South Asia-Europe trade ties and sets a template for future trade relations between large emerging and developed economies.
