Stepping Stone Deal?

A carefully balanced pact with the UK could set the tone and template for India's future free-trade agreements

- SHREYA NANDI

The recently signed trade pact with the United Kingdom (UK) will act as a crucial "stepping stone" and a benchmark for the "high-quality" agreements India intends to pursue, Commerce and Industry Minister Piyush Goyal has said. Calling it a "win-win" for both nations, Goyal argued that the deal would also enhance India's credibility in the global trade arena.

The India-UK Comprehensive Economic and Trade Agreement (CETA), signed on July 24 after three-and-a-half years of negotiations, signals that India is ready to face competition and shed its reputation as a high-tariff economy—a "tariff king," as the United States (US) has often labeled it. The pact will cut India's applied trade-weighted average tariff on goods imports from the UK from 15 per cent to 3 per cent.

Balancing red lines Experts point out that the deal was possible only because both sides respected each other's sensitivities and regulatory autonomy.

For the first time, India agreed to reduce tariffs on automobiles, albeit in a phased manner. The sector had been one of the most contentious points in negotiations. Indian negotiators eventually crafted a compromise: small cars remain protected, while larger vehicles face gradual tariff reductions, opening the segment to greater competition.

Alcoholic beverages, another sticking point, saw a similar approach. India agreed to phased duty cuts on whisky, brandy, rum, vodka, tequila, and ciders.

Agriculture, however, remained largely off the table. Dairy products, cereals such as wheat, rice, maize, and millets, and key edible oils and oilseeds were excluded from tariff cuts. On the UK side, sensitive items such as milled rice, sugar, pork, chicken, and eggs also remained protected.

Mobility, a politically sensitive issue in Britain, was addressed by formalizing existing visa rules for short-term and temporary business travel, offering certainty to businesses without introducing new concessions.