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India–UK FTA
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Context
India and the United Kingdom concluded negotiations on the Comprehensive Economic and Trade Agreement (CETA), marking the largest UK trade deal since Brexit.
Strategic Importance of India–UK FTA
- Post-Brexit Global Strategy: The FTA serves as the United Kingdom’s largest trade deal post-Brexit, aiming to realise the long-pursued ‘Global Britain’ vision through economic integration with India.
- India’s Global Manufacturing Push: The agreement aligns with India's “Make in India for the World” agenda, providing improved access to European markets while securing investment and regulatory cooperation.
- Sectoral Coverage and Geopolitical Balancing: The India–UK Roadmap 2030 underpins the FTA, encompassing collaboration in climate action, critical minerals, and maritime security, reducing both countries' overdependence on China.
Economic Gains and Mutual Benefits
- Trade and Investment Expansion: The UK projects an increase of £4.8 billion in annual GDP with expanded investment flows, while India anticipates a $34 billion bilateral trade rise over five years.
- Market Access and Tariff Reductions: High-tariff Indian exports like rice and textiles gain improved access to the UK, while premium British products such as Scotch whisky and chocolates benefit from phased duty reductions.
- Value Chain and SME Integration: The FTA encourages greater participation of Indian SMEs from hubs like Tirupur and Surat in UK-based value chains, reinforcing transnational manufacturing linkages.
Implementation Challenges and Policy Concerns
- Regulatory and Non-Tariff Barriers: India remains cautious about UK's stringent sanitary and phytosanitary standards and demands greater alignment in rules governing services and procurement.
- Labour Mobility and Mode 4 Limitations: India’s demands on Mode 4—ease of movement for professionals—remain largely unmet due to the UK’s restrictive visa and financial regulations.
- Parliamentary Scrutiny and Delays: The FTA's full operationalisation depends on UK parliamentary approval and resolution of contentious issues like carbon border tax and digital market protections.
Practice Question
“The India–UK Free Trade Agreement is more than a tariff-reduction pact; it is a geopolitical and economic strategic alignment.” Critically examine the multidimensional implications of the India–UK FTA in the context of post-Brexit global trade realignments. (250 words)
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