LONDON, July 15: Business and industry groups across India and the UK welcomed the free trade agreement (FTA) coming into force on Wednesday, which is set to unleash a flurry of tariff cuts that will catalyse bilateral trade through greater two-way movement of goods and services.
The Comprehensive Economic and Trade Agreement (CETA) was signed between Prime Minister Narendra Modi and his UK counterpart Keir Starmer in July last year.
It is expected to at least double the trade between the two countries from the current annual levels of estimated 48 billion pounds by 2030 and also boost their GDPs by nearly 5 billion pounds every year in the long run.
“The agreement will make it easier for our businesses to trade, invest and grow, while creating new opportunities across financial and professional services,” Dame Susan Langley, Lady Mayor of the City of London, told PTI.
Referencing her recent visit to India, the global ambassador for the UK capital’s financial hub said she witnessed the scale of opportunity in one of the world’s fastest-growing major economies first-hand as she dubbed CETA as a “landmark moment” for both nations.
“The City of London will support India’s growth ambitions through global expertise in sustainable finance, insurance, capital markets and fintech. This agreement is the start of a brilliant journey, within an ambitious partnership.
“I look forward to seeing greater flows of investment, innovation and talent between our two countries in the years ahead,” she said.
From aerospace to food and healthcare to financial services, CETA has been described as one of the most comprehensive trade deals that India has ever agreed. It will support industries employing millions, such as textiles, footwear and engineering goods.
“Well, happy birthday to CETA – the much awaited agreement that is going to catalyse the trade and economy between two great nations, Great Britain and India,” said Dr Kishore Jayaraman, Group CEO of the UK India Business Council (UKIBC).
“It is a day that the industry has been looking forward to, one that will put us on the right growth curve for the future,” he said.
Jayaraman said the UKIBC, a cheerleader of the pact through the negotiations, will double down with all its industry partners and governments on both sides to leverage the many benefits that will flow from CETA.
“We are now in the execution phase of this deal. The potential for both countries is enormous. The quoted figure is about 25 billion pounds increase in trade per year, but that is perhaps an underestimate of what it could potentially be,” said Anuj Chande, Partner at Grant Thornton UK and Head of its South Asia Business Group.
Based on the group’s annual ‘India Meets Britain Tracker’ analysis, Chande expects a significant bounce in the number of Indian companies operating in the UK – doubling from the current levels of around 2,000 by 2030.
“The volume and size of investment will increase immensely,” he predicted, highlighting technology as a “forerunner sector” alongside defence, advanced manufacturing and life sciences.
Tanuj Kapilashrami, Group Chief Operating Officer at Standard Chartered, hailed the FTA as a “landmark step forward for one of the world’s most important growth corridors”.
“By reducing trade tariffs, expanding market access and providing greater certainty for investors, it will create new opportunities for businesses of all sizes to invest and grow.
“Just as importantly, its digital and trade facilitation provisions will help make cross-border commerce faster and more efficient,” said Kapilashrami.
The British multinational bank chief pointed out that the real opportunity would now lie in turning the agreement into “tangible outcomes, with businesses that act early best placed to capture the benefits this deal unlocks”.
Ani Kaprekar, co-founder of Tech India Advocates and Senior Counsel for India at Trafalgar Strategy, expressed excitement that the pact is now in force.
“The UK-India relationship has never lacked ambition. The FTA coming into force is not the finish line, it’s the starting signal. The agreement creates the bridge; it is now up to businesses, innovators, investors and creators to cross it,” he said.
For Cyrus Vandrevala, a global Investor and co-founder of Intrepid Capital Partners, CETA is a “strategic growth architecture” between two economies with highly complementary strengths.
“India offers scale, talent, entrepreneurship and one of the world’s most dynamic consumer markets, while the UK brings capital depth, institutional credibility, research capability and global market connectivity,” said Vandrevala.
“For investors, the real opportunity lies in sectors where structural demand, technology and human impact converge, including AI, healthcare, food & nutrition, financial services and advanced services.
“This agreement creates the predictability and access required to back companies with cross-border ambition,” he said.
The investor highlighted the benefits in store for early movers, who can build “trusted partnerships and convert bilateral market access into global scale”.
According to a UK parliamentary analysis, businesses have faced “considerable barriers” to India’s market with average tariffs of 12 per cent in 2024 with some individual products such as beverages and tobacco at 150 per cent, textiles 255 per cent and transport equipment 125 per cent.
The India-UK CETA contains 30 chapters covering a wide range of issues, including trade in goods, trade in services, sanitary and phytosanitary (SPS) provisions, technical barriers to trade, digital trade, intellectual property and Government procurement.
Commerce and Industry Minister Piyush Goyal, in London with a large business delegation last month to build momentum around CETA, had referenced its entry into force this week as the opening of the “floodgates” to greater trade and business. (PTI)
