India–U.K. Comprehensive Economic and Trade Agreement (CETA) Comes into Force
Subject: Economy
Why in News?
The India–U.K. Comprehensive Economic and Trade Agreement (CETA) and the Double Contribution Convention (DCC) have come into force, marking a major milestone in bilateral economic relations. Both agreements were signed in July 2025 and are described by India as a “gold standard” economic partnership.
India–U.K. CETA
The Comprehensive Economic and Trade Agreement (CETA) is a Free Trade Agreement (FTA) aimed at expanding trade, investment, services, and economic cooperation between India and the United Kingdom.
The agreement is considered one of India’s most comprehensive and ambitious FTAs, creating a future-oriented economic partnership between two major global economies.
Objectives
- Increase bilateral trade and investment.
- Reduce tariff and non-tariff barriers.
- Improve market access for goods and services.
- Promote innovation, digital trade, and sustainable development.
- Strengthen economic cooperation between India and the U.K.
Tariff Liberalisation
U.K. Commitments
- Eliminates tariffs immediately on 96.8% of tariff lines, covering 97.7% of bilateral trade value.
- Provides quota-based reduced tariffs on another 2% of tariff lines.
- Overall concessions cover:
- 98.8% of tariff lines
- 99.5% of trade value
India’s Commitments
- Removes tariffs immediately on goods accounting for 30.3% of trade value.
- Gradually eliminates tariffs on another 47% of trade value.
- Offers quota-based tariff concessions on 12.1% of trade value.
Overall coverage:
- 89.5% of tariff lines
- 89.4% of trade value
Wider Coverage of the Agreement
Unlike traditional FTAs, CETA covers 30 chapters, extending beyond tariff reduction.
Key Areas
- Digital Trade
- Trade in Services
- Government Procurement
- MSMEs/SMEs
- Innovation
- Labour
- Environment
- Gender
- Investment Cooperation
Non-Tariff Measures
CETA also addresses barriers other than customs duties.
Sanitary and Phytosanitary (SPS) Measures
Ensures that food safety and animal/plant health regulations do not become unnecessary barriers to trade.
Technical Barriers to Trade (TBT)
Reduces unnecessary technical regulations, testing requirements, and certification procedures that hinder trade.
Sensitive Sectors Protected by India
India has protected several strategically important sectors, including:
- Dairy
- Cereals
- Pulses
- Vegetables
- Gold and Jewellery
- Smartphones
- Critical Polymers
Benefits
For India
- Better access to the U.K. market.
- Higher exports of goods and services.
- Opportunities for farmers, fisherfolk, workers, MSMEs, and women entrepreneurs.
- Increased investment and employment.
For the U.K.
- Greater opportunities in:
- Financial Services
- Professional Services
- Insurance
- FinTech
- Sustainable Finance
- Infrastructure Investment
Double Contribution Convention (DCC)
What is DCC?
The Double Contribution Convention (DCC) is a social security agreement that prevents Indian employees and employers from making double social-security contributions while working temporarily in the United Kingdom.
Why is it Needed?
Earlier:
- Indian professionals working temporarily in the U.K. contributed nearly 25% of salary to the U.K. National Insurance System.
- They also continued contributing to India’s social security system.
- Since many temporary workers could not access U.K. social-security benefits, these contributions became an additional financial burden.
Key Provisions
- Indian employees contributing to India’s social-security system will not be required to contribute to the U.K.’s National Insurance system for up to five years.
- Prevents double social-security payments.
- Reduces costs for both employees and employers.
Expected Impact
- Benefits over 75,000 Indian professionals.
- Benefits 900+ Indian employers.
- Improves competitiveness of Indian service providers.
- Boosts mobility of skilled professionals.
- Strengthens India’s IT and services exports.
Significance
- Deepens India–U.K. strategic partnership.
- Expands bilateral trade and investment.
- Reduces tariff and non-tariff barriers.
- Promotes digital trade and innovation.
- Facilitates movement of skilled professionals.
- Strengthens India’s position in global value chains.
- Enhances ease of doing business between the two countries.
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