India-UK Trade Deal: A Case of Managed Ambitions?

In India’s case, the agreement represents a strategic bargain — gaining not only a prized market for its merchandise exports, but also for its services and select labour mobility — while safeguarding sensitive domestic sectors, like agriculture.

On the other hand, for a post-Brexit UK, still searching for global relevance, this agreement carries a significant geo-economic message. It asserts the former empire’s ability to build a global trade architecture beyond the EU, relying on past connections.

But this diplomatic success hides a deeper truth — that the real measure of this deal will depend on its long-term implementation and the domestic adjustments it demands from both countries.

India Gains With Calibrated Openness

“India’s standout economic win is duty-free access for 99 per cent of its exports to the UK. This opens significant opportunities for labour-intensive sectors like textiles, leather, seafood, processed foods, and gems and jewellery — boosting both trade and employment,” pointed out a former secretary in the Ministry of External Affairs who didn't wish to be named.

However, as many analysts point out, equally critical is what India has excluded — sensitive items such as dairy, poultry, sugar, and certain industrial goods have been kept off the table, protecting domestic producers. This selective liberalisation reflects India’s trade doctrine since 1991—one that weighs global openness alongside political economy considerations, particularly rural sensitivities.

However, the most consequential advances have been made in the services sector, which accounts for over half of India’s GDP and is the bedrock of its global competitiveness.

Strategic Advances in Services

The agreement ensures broader market access across India’s core service strengths — IT and IT-enabled services, financial and legal services, consultancy, education, and digital trade.

“Now, it is up to the Indian service sector giants to step up their act and go beyond their model of body shopping, to engage in higher value-added services such as fintech, AI, chip designing, etc., to take advantage of this agreement,” said Swapan Sarkar, former President of the Indo-American Chamber of Commerce.

A Trade Legacy Revisited

While analysing this trade treaty, one must recall that the United Kingdom was once the colonial ruler of the entire Indian subcontinent. Trade under the British Empire was never on equal terms.

Tariff barriers were designed to block Indian manufacturers from accessing British markets — Indian goods rarely made it to shop shelves in Britain. Meanwhile, raw materials, like indigo, jute, and cotton, were imported duty-free from India, and British-manufactured goods — from pins to motorcars — entered India either free of duty or with minimal tariffs.

This exploitative trade regime was one of the foundational pillars of colonial economic extraction.

UK’s Gains & Limits

“From the UK’s perspective, the agreement is a strategic victory. It opens access to India’s vast consumer base for high-margin exports such as Scotch whisky, electric vehicles, cosmetics, medical devices, and luxury goods,” said Sarkar.

In services — particularly finance and law — the UK gains a foothold in an otherwise heavily regulated Indian market. The ability to participate in Indian government procurement, especially in flagship schemes like Make in India and Digital India, is a notable win for British firms.

This, according to many merchant bankers, is what tipped the agreement’s saleability within British political circles, despite the wide opening up of doors to Indian made goods and labour mobility. The financial services market in the UK has more than US$ 37 trillion worth of assets and accounts for 8.8 per cent of all jobs in that country.

Said Anil Johri, an independent merchant banker, “They want to have trading floors for insurance like Lloyd’s has in London. They want to attract Indian firms to buy more of their stock and bond offerings through the City of London, rather than via the US or other rival markets. I think we did well to trade that off with other gains.”

Yet, the deal has its limitations. India has not opened its market for British dairy products, pork, apples, or several processed food items, for instance — possibly disappointing UK farmers and agribusinesses — which could hurt the British ruling party. At the same time, cheaper Indian exports — especially textiles and processed foods — may pose competitive pressures on small British producers, again a cause for concern for many.

Internal Pressures & Asymmetric Reactions

The challenges of implementation differ in the two countries. India's concern involves whether small and medium enterprises (SMEs) can meet enhanced quality standards and comply with international norms. In services, criteria involving digital safeguards, labour standards, and ESG (environmental, social, and governance) provisions may prove especially difficult.

In the UK, the political backlash could be stronger. Farmers and small businesses — already strained post-Brexit — may question the government’s trade-offs and its logic of new economic alliances.

In both countries, the real test will lie in implementation, and the key questions which many are now posing include whether standards can be harmonised without eroding sovereignty; if labour mobility will help the average Indian mid-career professionals or only multinational firms; or if India’s state procurement commitments can be enforced transparently, despite the country’s notoriously opaque contracting environment?

Geo-Economic Signal, Not a Tectonic Shift

The good thing is that this FTA sends a strong geostrategic signal. Both India and the UK are seen here as seeking to operate within a rules-based trade framework, deepen their strategic engagement in the Indo-Pacific, and reduce over-dependence on supply chains dominated by China.

The agreement places equal emphasis on services and human capital flows alongside traditional goods trade — reflecting the new evolving contours of 21st-century trade diplomacy from India’s perspective.

A Template for A New Trade Era

Effectively, the India-UK CETA is all about 'managed' ambitions. Rather than being a deal pushing unbridled liberalisation, it can be described as a sector-specific, strategic advance. In other words, it upholds global integration while protecting national interests.

While it doesn't herald a seismic shift in the global trade order, it may serve as a template for the future — one where regional deals, targeted access, and value-based conditionalities shape the next generation of trade frameworks.

For both India and the UK, this agreement is not the final destination — but a foundational step toward deeper collaboration in a rapidly transforming global economy.

Can Others Match CETA?

Yet, the more pressing question that follows this FTA is whether major players, like the US or EU, would be willing to make similar concessions in a treaty with India? One doubts that. Concessions depend on the size of your market and your economic heft in global affairs.

Nevertheless, the answer to this question carries immense strategic weight, especially as the August 1 deadline set by US President Donald Trump fast approaches — and India is yet to conclude a trade deal with Washington.