India & UK has recently signed a Free Trade Agreement called Comprehensive Economic Trade Agreement (CFTA). The CETA promised to usher in not just an economic partnership but a plan for shared prosperity. The pact includes chapters on goods, services, innovation, govt procurement & IPR. The deal is expected to benefit Indian farmers, the MSME sector, Indian footwear & jewellery exports, as well as seafood & engineering goods sectors.
What has been the history of India-UK relations?
India and the United Kingdom share a long and complex history of relations that spans centuries.
| Colonial Era (1858-1947) | After the rebellion in 1857, India came under direct British rule in 1858. The British monarch became the Empress/Emperor of India. |
| After Independence | India decided to remain in the Commonwealth of Nations after becoming a Republic in 1950. |
| Phase of Strained Relationship | India-UK Relations were strained during the Cold War era. India pursued a non-aligned foreign policy while the UK was a NATO ally of the US. The UK opposed India’s wars with Pakistan and India’s nuclear tests. |
| Phase of Improvement | With the end of the Cold War & economic reforms in 1990s, UK became more eager to build economic relations with India. This started a phase of improvement in India-UK relations. |
| Phase of Strategic Partnership | The India-UK relationship was upgraded to a Strategic Partnership in 2004 & has recently been elevated to a Comprehensive Strategic Partnership, with the ambitious India-UK Vision 2035 setting clear goals for deeper collaboration. Regular high-level visits and dialogues have strengthened cooperation in areas like trade, investment, defence, and people-to-people links. |
Today, India and the UK enjoy a modern partnership bound by strong historical ties and a shared membership in the Commonwealth. The two countries collaborate extensively across a wide range of areas and are working to establish a comprehensive strategic partnership by 2030.
What are the areas of cooperation between India-UK?
1. Geo-Political Cooperation: UK supports India’s proposal for permanent membership of the UNSC. The UK is also an important interlocutor for India in the EU, G7, G20 and global forums. India-UK political cooperation deepens through institutions and fora such as India-UK Disarmament and Non-Proliferation Dialogue, India-UK JWG on Counter-terrorism and India-UK Foreign Office Consultations.
2. Economic Cooperation: After the establishment of Joint Economic and Trade Committee (JETCO) in 2005, the India-UK economic relations has further deepened:
- The trade between India and the UK has “more than doubled” between 2007 and 2019. The India-UK bilateral trade has increased to USD 20.36 billion in 2022-23.
- In 2022, India was the UK’s twelfth largest trading partner, accounting for 2% of the UK’s total trade.
- India has invested in 120 projects and created over 5,000 jobs in the UK to become their second-largest source of foreign direct investment (FDI) only behind the United States.
- India-UK FTA: The recent signing of the Comprehensive Economic and Trade Agreement (CETA) is a landmark development. It aims to double bilateral trade to $112-120 billion by 2030.
3. Defense and Security: India and the UK signed the Defence and International Security Partnership (DISP) in November 2015. It provides a strategic roadmap and direction to the evolving India-UK defence relations. At present, some 70 companies in the UK supply goods for aircraft and related equipment besides supporting platforms like the Jaguar, Mirage and Kiran aircraft.
4. Nuclear Cooperation: India and UK have signed a Civil Nuclear Cooperation Declaration in 2010 for the promotion and facilitation of cooperation in the nuclear field. In 2015, a Nuclear Collaboration Agreement was signed between the two countries as part of a comprehensive package of collaboration on energy and climate change.
5. Education: India and UK have been closely collaborating in the field of education. This is evident in the following cases:
- The launch of ‘UKEIRI Mobility Programme: Study in India’ in 2019. Under this Britain’s universities collaborate with Indian partners and send UK students to India.
- UK is among the most favoured destinations for Indian students to pursue higher education, with around 50,000 Indian students currently studying in UK.
6. Health: India and UK have been closely cooperating in the field of healthcare management. The close collaboration and association are mentioned below:
- The successful partnership between Oxford University, AstraZeneca and SII on COVID-19 vaccine has demonstrated the potential of Indian and UK expertise working together to solve international healthcare challenges.
- The two sides are also working on pandemic preparedness, Antimicrobial Resistance (AMR), digital health, Ayurveda and alternative medicines, as well as health worker mobility.
7. Climate and Environment: India-UK Green Growth Equity Fund has been established, which helps in the mobilization of institutional investments in the renewable energy, waste management, electric mobility and environment sub-sectors in India.
8. Cultural Cooperation: India and UK have signed a Memorandum of Understanding on Cultural Cooperation in 2010. The Nehru Centre (TNC), established in 1992 in London, is the cultural outreach of the High Commission of India in UK.
9. Diaspora Collaboration: Around 1.5 million people of Indian origin live in Britain. Indian diaspora are making significant contributions to the British Society. The representation of People of Indian Origin has increased in the British Parliament. The last PM of UK was also of the Indian Origin.
10. Cultural Cooperation: Signing of Programme of Cultural Cooperation (POCC) by India & UK. This landmark agreement promises to light up the cultural corridor between the 2 nations, reaffirming their shared creative spirit. The agreement also signals a shared commitment to cross-cultural collaboration & economic growth.
What is the Significance of the close India-UK relations?
1. India-UK FTA: The India-UK FTA will give a further boost to India’s labour-intensive sectors, increase Indian service exports, and diversify Indian trade partners.
| Benefits for India | The FTA grants 99% duty-free access for Indian exports to the UK, covering almost all trade categories. This is a significant boost for labor-intensive sectors like textiles, leather, footwear, marine products, gems and jewelry, sports goods, and toys as 45% of India’s merchandise exports to the UK will not attract any duty. It also opens up opportunities for engineering goods, auto components, and organic chemicals. Indian agricultural products like spices, mango pulp, and pulses will also benefit from duty-free entry. Consumers in India are expected to benefit from improved access to a variety of British products – from soft drinks & cosmetics to cars & medical devices – as average tariffs will drop from 15% to 3%. UK products like medical devices & aerospace parts will also be available in India at accessible & affordable rates. India has also excluded several high-sensitivity agricultural products from any tariff concessions such as dairy, fresh apples, walnuts, whey etc. Double Contribution Convention Agreement (Social Security Pact): It would help avoid double contribution to social security funds by Indian professionals working for a limited period in Britain. |
| Benefits for UK | The UK gains significant market access to India’s large and growing economy. Tariffs on key British exports like whisky and gin will be substantially reduced (from 150% to 75% initially, then to 40% over a decade). Duties on luxury automobiles (e.g., Jaguar Land Rover, Rolls-Royce) will also see a significant reduction (from 110% to 10% under a quota system) |
2. Geo-Political: A healthy relationship between the two is imperative for enhancing cooperation in the Indo-Pacific, Afghanistan, UNSC, G20 and Commonwealth. For ex- India welcoming the UK’s accession in the Indo-Pacific Ocean’s Initiative under the Maritime Security pillar.
3. Geo-Strategic: Deepening of engagement with UK can help India to counter China’s rise in the Indian Ocean Region. The UK can use India as an alternative destination to China and its companies can invest in India as part of ‘China plus one strategy‘. (China Plus One Strategy: It is the business strategy to avoid investing only in China and diversify business into other countries).
4. Climate Change: The deepened India-UK relations will be helpful to achieve the goals of the Paris Agreement and to implement the Glasgow Climate Pact. For ex- India and UK have agreed to work for early operationalisation of the Global Green Grids-One Sun One World One Grid Initiative (OSOWOG) under ISA.
5. Cutting-Edge Research: The Vision 2035 emphasizes developing cutting-edge technology and research, focusing on future telecoms, AI, critical minerals, semiconductors, quantum, biotechnology, and advanced materials.
6. Diaspora: The Indian diaspora in the UK (over 1.6 million people) serves as a significant bridge, fostering cultural exchange and strengthening bilateral ties.
What are the Challenges in the relations?
1. India-UK FTA: The CFTA’s most extensive concession by India to UK is in government procurement. The UK firms are now allowed to participate in govt tenders, offering them Class-2 Status under Make in India Rules, which requires 20 to 50% domestic value addition. This concession will dilute the benefits that programmes like Make in India & Atmanirbhar Bharat were designed to protect. Also, it will erode India’s ability to use public procurement as a lever for policy goals such as import substitution, domestic capacity building & employment generation.
2. UK’s closeness to Pakistan and China: The UK’s ties with Pakistan complicates the process of building a closer defence and security with India. UK and India have also sometimes diverged in their positions towards China’s role in the Indian Ocean. While India has been concerned with China’s growing influence in the Indo-Pacific region through the Belt and Road Initiative project, the UK by contrast has engaged substantially with Belt and Road.
3. Khalistan Issue: India has repeatedly raised concerns about the presence and activities of pro-Khalistan extremist elements in the UK. India views these activities as a threat to its sovereignty and internal security, and expects the UK to take stronger action to curb them.
4. Slow progress in deepening of Defence Ties: The UK has been slow to adapt to the Indian government’s increasingly preferred method of acquisition- through Government-to-Government (G2G) agreements or Foreign Military Sales (FMS) for deals.
5. Different stands on Russia Ukraine conflict: The U.K has openly criticized the Russian invasion while the same has not yet been done by India. This may emerge as a potential bottleneck in future.
6. Extradition Rigidities: Both the countries have an extradition treaty between them. However, speedy extradition is still a far-fetched dream. India has not been able to extradite Vijay Mallya, Nirav Modi and other fugitives from London.
7. Illegal Migrants: There are more than 1 lakh illegal Indian immigrants in the UK. The UK government has put pressure to send them back but both the countries have not yet signed the migration and mobility agreement.
8. Anti-colonial resentment against Britain: India still suffers from the legacy of Partition like the problem with Pakistan and the issue of Kashmir.
What Should be the Way Forward?
1. Jointly reviving multilateralism and multilateral institutions: India and UK must shed their differences in the stand in the multilateral bodies like WTO and UNFCCC. UK government should stand with the causes of the underdeveloped and developing countries instead of siding with the developed countries.
2. Agreement on “migration and mobility”: India and Britain should explore an agreement on “migration and mobility” to facilitate the legal movement of Indians into Britain.
3. Streamlining the extradition process: UK should live up to its commitment to the extradition of Indian fugitives. For ex- Nirav Modi should be extradited as his extradition process is almost completed.
4. Deeper defence and security engagement: The UK and India’s convergence of interests in the Indian Ocean region offers an important opportunity to increase engagement on defence and security. Hence, both nations should promote standards of transparency and sustainability for infrastructure projects in the Indian Ocean region.
6. Better balancing of relations: The UK should take care for ensuring stronger ties with China and Pakistan are not at the expense of a deeper partnership with India. This will improve India UK relations further.
Conclusion:
The India-UK relationship in 2025 stands at a historic high, driven by the new Free Trade Agreement, expanding strategic cooperation, and shared global interests. Both nations are leveraging their partnership to foster innovation, create economic opportunities, and address global challenges, setting the stage for a more integrated and vibrant bilateral future.
| Read More: The Indian Express UPSC Syllabus- GS 2- India’s relation with the developed nations |
