India-UK CETA: Benefits seen to accrue to both countries amidst global economic churn

India’s recently signed trade pact with the UK and efforts to boost bilateral trade and investments have become a key priority for the two countries in the backdrop of global economic developments — most importantly, the high tariffs imposed by the US.

While the UK had already been looking forward to the trade pact, which is its first such initiative since breaking away from the European Union, India has been seeking to diversify its export markets after facing 50% tariffs on its goods by the US.

Not surprisingly then, the India-UK Joint Statement issued during the two-day visit of UK Prime Minister Keir Starmer to Mumbai focused on growth in investment and trade between the two countries. Prime Minister Narendra Modi and UK Prime Minister Starmer held restricted as well as delegation-level talks in Mumbai on October 9, where they expressed satisfaction at the upward trajectory of the India-UK Comprehensive Strategic Partnership. The two leaders also participated in the reconstituted India-UK Forum.

“Both leaders looked forward to the ratification of the India–UK Comprehensive Economic and Trade Agreement (CETA) as early as possible to realise its benefits,” said the joint statement.

While the CETA was signed on July 24 during PM Modi’s visit to the UK, its actual operationalisation is still months away as it needs to be ratified by the UK Parliament. The process, according to officials, could take a few months or up to one year and may come into effect by next July.

“The Prime Ministers also welcomed the resetting of the Joint Economic and Trade Committee (JETCO), which will support the governance and utilisation of the CETA and drive forward our wider trade and investment partnership,” the statement further said.

Starmer came with a delegation of 125 UK CEOs, entrepreneurs, university vice-chancellors and cultural leaders who are looking for opportunities in India.

India is already the UK’s second-largest investor, and more than 1,000 Indian companies operate in the UK, supporting millions of UK jobs.

As per a UK government release, nearly 7,000 brand-new jobs will be created in the country due to a raft of major new deals secured by the Prime Minister during his visit to India this week.

“Sixty-four Indian investors have confirmed their confidence in the UK as a business destination by collectively investing £1.3 billion into some of Britain’s most thriving businesses — demonstrating the impact the UK-India trade deal is already having on investor confidence,” it said. These include TVS Motors, TVS Mobility, Muthoot Finance UK, Cyient and Nazara Technologies.

The trade pact aims to double bilateral trade to about $130 billion by 2030, from about $56 billion at present. The agreement provides duty-free access for 99% of India’s exports to the UK, covering nearly the entire trade basket. India has reduced tariffs for several sectors in the UK, including aerospace, automobiles and electrical machinery.