What are the gains from the India-U.K. trade deal? | Explained
The story so far: The India-U.K. Comprehensive Economic and Trade Agreement (CETA) came into effect on July 15, a year after it was signed. Coupled
The story so far: The India-U.K. Comprehensive Economic and Trade Agreement (CETA) came into effect on July 15, a year after it was signed. Coupled with this agreement, the Double Contribution Convention (DCC) also comes into effect at the same time. The deal has been hailed by both sides, with Commerce Secretary Rajesh Agrawal even saying it is the “gold standard” of India’s free trade agreements. What does India get in terms of trade benefits? While speaking to the media a day before the deal went into force, Mr. Agrawal said the CETA stood out not just because of its breadth, but also its depth. That is, not only does it cover a wide range of tariff and non-tariff issues, but it also yields deep concessions within several of these issues. As per the deal, the U.K. will immediately on implementation eliminate tariffs on 96.8% of its tariff lines, accounting for 97.7% of the trade value. That is, these tariffs have gone down to zero as of July 15. An additional 2% of tariff lines, amounting to 1.8% of trade value, will see reduced tariffs based on quotas. In total, this covers 98.8% of tariff lines and 99.5% of trade value. Apart from tariffs, the 30 chapters of the CETA also cover digital trade, government procurement, small and medium enterprises, innovation, labour, environment, and gender. They also address non-tariff barriers such as Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) so that they do not become insurmountable trade restrictions in the future.
How else does India benefit from the deal? One big win for India is the DCC. Under this deal, Indian workers in the U.K. and their employers will no longer need to pay social security in the U.K. if that payment is being made in India. The duration of this relief was initially set at three years when the deal was signed in July 2026 but was revised to five years. The problem was that Indian workers in the U.K. were paying social security in India as well as in the U.K. Most Indian workers in the U.K. are there for short periods of up to five years. However, under U.K. laws, the benefits from social security can be availed by a worker only after 10 years of contributions. As a result, Indian workers would make the payments, but return to India before they could avail the benefit. The five-year relief under the DCC means that about 90% of Indian workers in the U.K. will no longer have to part with about 23% of their salaries towards U.K. social security, as long as they are paying social security in India. According to Mr. Agrawal, this will benefit more than 75,000 Indian workers and more than 900 employers. The CETA also incorporates a significant section on services, which is of considerable interest to India since services exports are a vital engine of growth. The U.K. has agreed to grant commercial presence rights to Indian companies in sectors such as computer services, consultancy, and environmental services.
The BriefWire