PYQ Relevance:[UPSC 2024] The West is fostering India as an alternative to reduce dependence on China’s supply chain and as a strategic ally to counter China’s political and economic dominance.’ Explain this statement with examples. Linkage: India’s ongoing negotiations for a Free Trade Agreement (FTA) with both the UK and the EU are major, high-profile current affairs issues. IR questions in Mains heavily incorporate a current affairs angle. |
Introduction:
- The signing of the Comprehensive Economic and Trade Agreement (CETA) in July 2025 marks a major milestone in India–UK relations, cementing their partnership in trade, technology, defence, and climate cooperation.
- British Prime Minister Keir Starmer’s visit to Mumbai further signals mutual intent to deepen collaboration under the evolving Comprehensive Strategic Partnership (CSP) framework of Roadmap 2030 (2021).
- The agreement reflects a broader trend — India’s calibrated engagement with post-Brexit Britain and the European continent, aligning trade liberalisation with strategic convergence.
India–UK Relations: A Quick Recap
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India–UK Economic Partnership under CETA:
- Framework: The CETA (2025) combines tariff reduction, regulatory alignment, and investment facilitation, aiming to double bilateral trade by 2030.
- Benefits for India:
- Tariff cuts on pharmaceuticals, textiles, and agricultural exports.
- Enhanced access for IT, green tech, and digital services.
- Implications for the UK:
- Lower duties on automobiles, Scotch whisky, and high-end machinery.
- Post-Brexit diversification into South Asian markets.
- Double Contributions Convention (DCC): Exempts Indian professionals in the UK from dual social security payments for up to three years.
- Bilateral Investment Treaty (BIT): Ensures investor protection and promotes sustainable FDI in manufacturing, renewables, and infrastructure.
- Defence Industrial Partnership (2025): Facilitates joint R&D, co-production, and defence manufacturing, aligned with Atmanirbhar Bharat.
- Technology Security Initiative (TSI, 2024): Coordinates semiconductors, quantum computing, AI, and critical minerals cooperation at national security adviser level.
Parallel European Engagements:
- India’s UK outreach complements its broader European diversification strategy:
- EFTA Trade and Economic Partnership Agreement (TEPA): In effect from October 2025, ensuring USD 100 billion investment over 15 years.
- EU Negotiations: Trade with the European Union reached USD 136.5 billion (FY 2024–25) with sustained dialogue on an FTA.
- This multi-vector diplomacy balances India’s engagement between continental Europe and post-Brexit Britain.
- Europe’s emphasis on technological sovereignty, climate neutrality, and Indo-Pacific cooperation aligns with India’s maritime and sustainability interests.
- The combined outreach enhances India’s access to capital, innovation, and strategic technologies, consolidating its role as a balancing power in global governance.
Economic and Strategic Significance:
- Complementarity: India offers scale and skilled labour, while the UK contributes technology, capital, and innovation ecosystems.
- Co-Development: Collaboration in green energy, fintech, advanced manufacturing, higher education, and sustainable finance.
- Geostrategic Convergence:
- UK’s support for India’s UNSC seat and NSG membership.
- Joint naval and maritime initiatives under the Indo-Pacific Oceans Initiative (IPOI).
- Partnership on Electric Propulsion Capability Initiative in naval systems.
- Diaspora Role: The Indian diaspora serves as a connective economic and cultural bridge, amplifying trade and investment flows.
- The relationship now transcends transactional trade, emerging as a multi-domain strategic alliance integrating security, sustainability, and innovation.
Challenges and Negotiation Frictions:
- Political Sensitivities: Colonial legacy and diaspora-linked protests periodically affect diplomatic optics.
- Negotiation Hurdles: Differences on tariff schedules, rules of origin, and intellectual property.
- TRIPS-Plus Provisions: India’s resistance to stronger IP norms preserves its pharmaceutical flexibility.
- Immigration and Data Divergences: Require harmonised frameworks for professional mobility and digital governance.
- FTA Ratification Delays: Absence of fixed timelines for CETA and BIT create investor uncertainty.
Despite frictions, both sides perceive these accords as long-term strategic enablers, not mere commercial instruments.
Conclusion:
The next phase of engagement should focus on joint innovation, co-production, and sustainability-based partnerships, moving beyond conventional tariff-based frameworks. Strengthening defence R&D and technology transfer mechanisms will foster greater self-reliance and industrial growth in both nations.
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