[Answered] Examine the potential of the India-UK partnership as a launch pad for Indias growth amid US protectionism. Critically analyze the need for structural reforms to leverage trade deals.

Introduction

Amid renewed US protectionism—like 50% tariffs on Indian goods, Indias Comprehensive Economic and Trade Agreement (CETA) with the UK offers a strategic window to expand exports and diversify markets within a shifting global trade order.

The Context: Rising Protectionism and Trade Realignment

1. US Tariff Barriers: India faces 100% tariffs on pharma imports and 50% duties on goods under America First policies.
2. Global Fragmentation: WTO (2024) warns global trade growth has slowed below 1%, reflecting deglobalization and supply-chain nationalism.
3. Indias Exposure: The US is Indias largest export destination (~$118 billion in 2024); overdependence creates vulnerability to unilateral policy shocks.
4. Hence, diversifying trade partners through strategic FTAs—like with the UK, EU, UAE, and Australia—is a geopolitical and economic imperative.

The India-UK CETA: A Launch Pad for Growth

1. Scope and Ambition: Covers over 99% tariff lines in industrial and agri-products. Targets doubling bilateral trade from $56 billion (2024) to $120 billion by 2030.
2. Complementarities: India enjoys a trade surplus with the UK in both goods ($23B) and services ($33B). The UKs demand structure aligns with Indias export strengths—textiles, gems, machinery, and pharmaceuticals.

Key Opportunities:

1. Textiles & Apparel: UK imported $22.3B worth in 2023; Indias share only $1.6B. Zero-tariff access post-CETA enhances competitiveness vs. China (9–12% tariffs).
2. Gems & Jewellery: UKs $92.8B import market—Indias $0.6B share can expand as tariffs fall.
3. Leather & Footwear: UKs $8.5B import market; CETA reduces Indias 8% duty disadvantage.
4. Strategic Hedge: The UK can absorb part of Indias export losses due to US tariffs while strengthening the Global Britain–Atmanirbhar Bharat synergy.

Beyond Tariff Reductions: The Need for Structural Reforms

Reduced tariffs alone are insufficient; India must undertake systemic reforms to convert potential into performance.

1. Trade Facilitation & Logistics: According to the World Bank Enterprise Survey (2024), average customs clearance time in India is 17.3 days, compared to 6.7 in Bangladesh and 3.3 in China. Implementing National Logistics Policy (2022) and Gati Shakti Master Plan can cut logistics costs (currently ~13% of GDP) to the OECD average of 8%.
2. Regulatory and Institutional Efficiency: As Manish Sabharwal notes, India suffers from regulatory cholesterol—overlapping compliance and approvals that hinder scale. Streamlining industrial regulations, digitizing trade documentation under ICEGATE 2.0, and simplifying SEZ rules are essential for export competitiveness.
3. Access to Finance and Capital: MSMEs face high credit costs (9–12%). Expanding Export Credit Guarantee Corporation (ECGC) coverage and operationalizing NIRVIK scheme can unlock export potential.
4. Cluster-Based Industrial Strategy: Integrated manufacturing clusters with shared testing and design facilities will enhance quality and reduce cost asymmetries. PLI Schemes and PM MITRA parks must align with FTA-driven sectoral opportunities.
5. Human Capital & Skilling: The UK-India Global Innovation Partnership can boost high-skill employment in green tech, AI, and biotech sectors. Skilling programmes must integrate UKs T-levels and vocational benchmarks to match labour mobility needs.

Strategic & Geoeconomic Significance

1. The UK is Indias fifth-largest investor, with cumulative FDI of $33 billion.
2. Cooperation in critical minerals, defence manufacturing, and higher education can deepen strategic ties.
3. CETA can act as a template for future FTAs with the EU, balancing Western protectionism with diversified alliances.

Conclusion

As Raghuram Rajan argues in The Third Pillar, reform, openness, and local empowerment drive sustainable growth. Indias partnership with the UK must pair tariff gains with institutional and competitiveness reforms.