Why in NEWS
The Indian Prime Minister’s visit to London led to the launch of India–UK Vision 2035 and the formalisation of the Comprehensive Economic and Trade Agreement (CETA), aiming to push bilateral trade beyond USD 100 billion by 2030.
Key Terms/Concepts
| Term | Explanation |
|---|---|
| CETA | A Free Trade Agreement (FTA) between India and the UK, reducing trade barriers and duties |
| Vision 2035 | A roadmap outlining long-term cooperation between India and the UK across strategic areas |
| BIT | Bilateral Investment Treaty — agreement to protect investments between two countries |
| JETCO | Joint Economic and Trade Committee to monitor trade cooperation |
| Double Contribution Convention | Exempts Indian professionals from UK social security contributions for 3 years |
| IPOI | Indo-Pacific Oceans’ Initiative — India-led framework to ensure a secure Indo-Pacific |
| CBAM | Carbon Border Adjustment Mechanism — a tariff system based on carbon content of imports |
Key Highlights of India–UK Vision 2035
| Focus Area | Highlights |
|---|---|
| Trade & Economy | CETA signed; JETCO to oversee; progress on BIT |
| Technology | Focus on AI, quantum tech, semiconductors, critical minerals under Technology Security Initiative |
| Defence | 10-year industrial roadmap; joint R&D in jet engines, maritime, energy weapons; RMSCE under IPOI |
| Climate | Cooperation in green finance, offshore wind, nuclear tech, solar alliance, disaster infrastructure |
| Education | UK campuses in India; mutual degree recognition; green skill jobs |
| Global Governance | Joint push for reforms in UN, WTO, IMF, World Bank |
Key Highlights of India–UK CETA
| Feature | Details |
|---|---|
| Market Access | 99% duty-free access for Indian goods in the UK |
| Tariff Reductions | India to cut/eliminate duties on 90% of UK imports, incl. cars, alcohol |
| EV Policy | India to remove duties on UK EVs under GBP 40,000 after 6 years |
| Services Sector | Greater access for Indian IT, finance, hospitality; easier visas |
| Double Contribution | No UK social security deductions for Indian professionals for 3 years |
| Inclusive Growth | Focus on women, youth, MSMEs, farmers, innovators |
| Agriculture | Tariff reductions on Indian seafood, edible oils, processed foods |
Impact of the Agreement
| Area | Impact |
|---|---|
| Trade | Bilateral trade projected to reach USD 112 billion by 2030 |
| Jobs | Boost in employment in manufacturing, services, and farming sectors |
| Investment | Increased FDI flow, especially into MSMEs and startups |
Evolution of India–UK Relations
| Sector | Progress |
|---|---|
| Trade | USD 21.34 billion trade in 2023–24; exports up by 12.6% in 2024–25 |
| Technology | UK is India’s 2nd top R&D partner; focus on AI, semiconductors, green hydrogen |
| Defence | Joint military exercises and defence tech cooperation in Indo-Pacific |
| Health | Covid-19 vaccine partnership; 60,000 Indians in NHS |
| Diaspora | 1.86 million Indian-origin people in the UK contributing across sectors |
Key Areas of Friction
| Issue | Concern |
|---|---|
| Extradition | UK sheltering fugitives like Vijay Mallya strains trust |
| Ukraine War | India’s neutrality vs UK’s strong pro-Ukraine stance |
| Climate Tariffs | UK’s CBAM may hurt Indian steel exports |
| Khalistani Extremism | India demands tougher UK action on separatist activities |
| IPR Rules | UK’s strict IP laws vs India’s need for access to affordable medicine |
What Steps Can India Take to Strengthen Ties
| Area | Recommendation |
|---|---|
| Security | Collaborate via AUKUS, deepen Indo-Pacific and cyber defence cooperation |
| Climate | Joint innovation in clean energy and sustainable agriculture |
| Investment | Promote India as a Global Capability Centre (GCC) hub |
| Diaspora Engagement | Mobilize UK-based Indian community for influence and outreach |
In a nutshell
Memory Code: TIDE–CIG
TIDE – Trade, Innovation, Defence, Education
CIG – Climate, Investment, Governance
Prelims Practice Questions
- Which of the following sectors is expected to benefit the most from duty-free access under the India-UK CETA?
a) Petroleum
b) Textiles
c) Pharmaceuticals
d) Gems and Jewellery - Under the CETA agreement, duties on electric vehicles priced below which amount will be eliminated after six years?
a) GBP 50,000
b) GBP 60,000
c) GBP 30,000
d) GBP 40,000 - The India-UK Technology Security Initiative focuses on all of the following except:
a) Telecom
b) Blockchain
c) Artificial Intelligence
d) Critical minerals
Mains Questions
- “The India–UK Vision 2035 represents a shift towards a more strategic, inclusive, and sustainable partnership.” Discuss. 10 Marks (GS2 – International Relations)
- Examine how Free Trade Agreements like CETA help in inclusive economic growth, particularly for MSMEs and agriculture in India. 10 Marks (GS3 – Economy)
Answers with Explanations (Prelims)
| Ques | Answer | Explanation |
|---|---|---|
| 1 | b) Textiles | Labour-intensive sectors like textiles, leather, marine products benefit most |
| 2 | d) GBP 40,000 | EVs below GBP 40,000 will have zero duty after 6 years |
| 3 | b) Blockchain | Not explicitly mentioned as part of the TSI focus areas |
