Context:

• India and the United Kingdom signed a Free Trade Agreement (FTA) on May 6, 2025, marking the culmination of negotiations that began in January 2022.
• The FTA has proceeded relatively quickly by the standards of negotiation timelines. For example, the one with the EU has been dragging on for nearly twenty years, but it appears to have gained momentum recently.

Strategic Timing and Geopolitical Context of the India-UK FTA:

• Post-Brexit UK strategy:
  • Post-Brexit (2020), the UK has actively sought new trade partners, signing deals with Japan, Singapore, and Vietnam, and joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) - a mega trade bloc of 12 countries.
  • The FTA with India is the UK’s most significant trade deal post-EU exit, given India’s fast-growing economy and rising middle class.
• India’s trade strategy:
  • In line with the goal of becoming a “Viksit Bharat” by 2047, India is increasingly integrating with global trade systems.
  • The FTA is India’s first major FTA outside Asia, signalling a shift towards deeper global engagement and is a manifestation of comparative advantage (Ricardian theory).

Key Provisions of the India-UK FTA and Economic Gains:

• For India:
  • Improved market access: Indian exports to the UK to benefit from reduced or zero tariffs - especially in: mineral fuels, pharmaceuticals, apparel, chemicals, machinery, iron and steel
  • Ease of mobility: Eases entry for Indian professionals and students, addressing the UK’s ageing workforce.
• For the UK - Access to India’s market:
  • High-value exports like automobiles, Scotch whisky, legal and financial services.
  • India offers a young and digitally savvy consumer base with opportunities for British technology, education, and professional services.
  • The attention towards diversification away from China, coupled with India’s strong economic trajectory, presents the UK with a rare opportunity.

Safeguards and Strategic Provisions:

• Phased tariff reductions: On sensitive goods (e.g. whisky, automobiles, agri-products) to prevent market shocks.
• Quotas: Introduced to prevent flooding of markets.
• Reciprocal benefits: UK to eliminate tariffs on Indian textiles, boosting Make in India and manufacturing.

Economic Impact and Investment Landscape:

• Bilateral trade: £42 billion by mid-2024; India maintains a trade surplus of £8 billion.
• Investment flows:
  • UK: 6th-largest investor in India, over £38 billion in the past 3 years, in sectors like financial services and manufacturing.
  • India: 2nd-largest source of FDI in the UK in 2023.
• Goal: Double bilateral trade by 2030.

Progressive Elements and Challenges:

• Trade rules and modernization:
  • Need for harmonisation of standards, regulations, and norms.
  • Focus on e-commerce, digital trade, and climate-related trade rules.
  • India has opted for non-binding labour and environmental provisions (“best endeavour” clauses).
• Education and services:
  • Promotion of UKIERI (UK-India Education and Research Initiative).
  • Emphasis on Mutual Recognition Agreements (MRAs) for:
    • Academic qualifications
    • Professional licenses

Significance of the India-UK FTA in India's Trade Diplomacy:

• Paradigm shift: From protectionism to proactive trade engagement.
• Foundation for future FTAs: Encouraging signals for upcoming deals with the EU and the US.
• Instrument of domestic reform: FTAs can catalyse reforms in labour laws, logistics, scale inefficiencies, and bureaucratic hurdles.
• Bilateralism vs multilateralism: With multilateralism in a permanent coma, well-negotiated FTAs for India can play a role similar to that played by the WTO in the upscaling of the Chinese economy.

Conclusion:

• The India-UK FTA is not just a trade pact, but a strategic and economic realignment.
• It underscores India's readiness to become a global economic player and leverages FTAs as tools for growth, reform, and integration.
• The FTA’s success will depend on effective implementation, ongoing dialogue, and domestic readiness to meet global standards.

Q1. What is the significance of the India–UK Free Trade Agreement (FTA) in the context of India’s trade policy and economic aspirations?

Ans. The FTA marks India’s first major trade pact outside Asia and aligns with its goal of becoming a developed nation by 2047 through enhanced global integration.

Q2. Discuss the strategic interests of the United Kingdom in signing the FTA with India post-Brexit.

Ans. Post-Brexit, the UK aims to diversify trade ties and sees India as a key market due to its fast-growing economy and expanding consumer base.

Q3. Highlight the key sectors of mutual benefit under the India–UK FTA.

Ans. India gains duty-free access for exports like pharmaceuticals and textiles, while the UK benefits from access to India's markets for automobiles, Scotch whisky, and financial services.

Q4. How does the India–UK FTA address concerns over sudden import surges and trade imbalances?

Ans. The agreement incorporates phased tariff reductions and import quotas to safeguard against market disruption from excessive imports.

Q5. In what ways does the India–UK FTA promote mobility and professional engagement between the two nations?

Ans. The FTA includes provisions for easier movement of professionals and students, along with mutual recognition of academic and professional qualifications.

Source:IE

Context

• The contemporary global energy and geopolitical landscape is rapidly evolving, driven by shifting power dynamics, technological innovation, and the pressing need for climate action.
• Against this backdrop, recent diplomatic overtures between the United States and India signal a pivotal opportunity to solidify a forward-looking strategic partnership.
• Highlighted by U.S. Vice-President J.D. Vance’s emphasis on deeper collaboration in energy and defence, and mirrored by India's articulations, this renewed engagement is not simply about short-term alignment but the construction of a robust framework for long-term cooperation.
• Though these areas of convergence are not new, the urgency and complexity of today’s challenges demand a deeper, more strategic investment in bilateral ties.

Energy Security: A Strategic Imperative for India

• India's pursuit of energy security is grounded in three critical imperatives: ensuring the availability of resources at predictable costs, safeguarding supply chain integrity, and promoting sustainability.
• These objectives are not merely operational but foundational to India’s broader development and climate strategies.
• The nexus between nuclear energy and critical minerals presents a fertile ground for collaboration with the United States, combining India’s growing demand and policy innovation with American capital and technological prowess.

The Building Blocks of India-US Energy Future

• Critical Minerals: Building the Architecture of Resilience
  • The transition to clean energy is as much about electrons as it is about elements.
  • Critical minerals such as lithium, cobalt, and rare earth elements underpin technologies ranging from electric vehicles to defence systems and renewable energy infrastructure.
  • China’s near-monopoly over rare earth processing, controlling close to 90% of global capacity, has exposed the fragility of existing supply chains and underscored the strategic vulnerability of nations dependent on these resources.
  • In response, India and the U.S. signed a memorandum of understanding in 2024 aimed at diversifying global critical mineral supply chains.
• Nuclear Energy: A Catalyst for Decarbonisation and Industrial Growth
  • India’s surging electricity demand, coupled with its net-zero ambitions, necessitates a diversified, low-carbon energy portfolio.
  • Nuclear power emerges as a critical pillar in this matrix, offering reliable baseload power that complements intermittent sources like solar and wind.
  • Despite its ambitious goal of achieving 100 GW of nuclear capacity by 2047, India currently operates with just over 8 GW, necessitating a dramatic acceleration in deployment.

Guiding Principles for An Effective Partnership on Critical Minerals

• A Holistic Perspective
  • Critical minerals should be viewed as enablers across multiple strategic sectors, not merely within the confines of mining.
  • This broader lens will facilitate cross-sectoral collaboration and long-term innovation between Indian and American institutions.
• Bilateral and Plurilateral Synergies
  • The establishment of supply guarantees and collaborative frameworks must drive the partnership.
  • The creation of an India-U.S. Critical Minerals Consortium could facilitate joint exploration and processing initiatives.
  • Moreover, leveraging plurilateral platforms like the Quad, including Japan and Australia, could exponentially increase technological capabilities and resource access.
• Long-Term Commitment
  • Unlike solar farms or battery plants, which can be operational within a few years, mining and processing infrastructure take decades to develop.
  • A 20-year roadmap with interim milestones is essential. In this context, the proposed India-U.S. Mineral Exchange, a blockchain-enabled platform for transparent trade and traceability, could set global benchmarks for ethical and resilient supply chains.
  • Additionally, establishing joint strategic stockpiles and co-investing in third-country projects across resource-rich regions such as Africa and Latin America can shield both nations from geopolitical shocks.

Necessary Reforms for an Effective Nuclear Collaboration

• Streamlined Deployment
  • Reducing the construction timeline of nuclear projects from nine to six years can significantly reduce costs and improve investor confidence.
  • This requires standardized reactor designs, expedited approvals, and skilled project execution.
• Private Sector Integration
  • Unlocking private capital is key. Small Modular Reactors (SMRs), with lower upfront costs and siting flexibility, offer a viable path forward.
  • However, their bankability depends on clear offtake mechanisms, risk mitigation instruments, and long-term purchase agreements.
  • India must reorient its financial systems, given that the projected investment requirement for 100 GW of nuclear power could reach $180 billion.
• Legislative and Regulatory Reform
  • The amendment of India’s Civil Liability for Nuclear Damage Act, 2010 is vital to enabling private investment and international collaboration.
  • The recent approval for U.S.-based Holtec International to transfer SMR technology to Indian firms exemplifies the promise of Indo-U.S. technological synergy.
  • However, safety must remain paramount. As India positions itself to lead in SMR manufacturing, robust protocols for waste management and decommissioning must be integral to the strategy.

The Way Forward: Strategic Vision in a Volatile World

• The April 2025 edition of the IMF’s World Economic Outlook points to an increasingly uncertain global environment marked by trade tensions and economic fragmentation.
• In this context, a resilient, long-term India-U.S. energy partnership offers mutual strategic assurance.
• India’s growth trajectory and the U.S.’s technological ecosystem are inherently
• Together, they can build not just a bilateral relationship, but a global coalition for energy resilience and sustainability.
• Such a partnership must move beyond symbolic agreements and embrace the plumbing of cooperation, investment tracking systems, workforce training, data-sharing frameworks, and innovation platforms like the U.S.-India Initiative on Critical and Emerging Technology (iCET).
• These institutional frameworks are essential to translating high-level intent into tangible outcomes.

Conclusion

• The foundation for a robust India-U.S. partnership on energy and critical minerals has already been laid.
• What remains is the commitment to operationalise this vision with long-term strategic clarity and pragmatic action.
• As India hosts the upcoming Quad summit and assumes greater leadership in global energy governance, this moment is ripe for embedding cooperation into durable institutions and cross-border frameworks.
• A resilient future demands foresight, investment, and trust, and the India-U.S. partnership is uniquely positioned to deliver on all three.

Context

• India stands out among emerging economies for an unusual characteristic: its economic growth has been led not by manufacturing, as is typically the case, but by the services
• Since 1980, the share of manufacturing in India’s gross value added has barely risen, from 16% to 17.5%, while services have surged from 33% to 55%.
• This distinct trajectory reflects not only the dynamism of India's services sector but also deep-rooted structural and regulatory challenges within its industrial base.

Reason Behind India’s Manufacturing Stagnation: The Regulatory Burden on Manufacturing

• Unlike services, which have historically flown under the radar, manufacturing has been tightly bound by outdated and often arbitrary regulations.
• The factory continues to be treated as the archetype of industrial activity, attracting more scrutiny and compliance requirements than service-sector firms such as call centres or software companies.
• This regulatory bias has created an imbalanced ecosystem. As services grow, they are increasingly coming under regulatory attention, revealing how excessive and illogical many of these rules are.
• The anecdote of an inspector demanding to see a snake-pit in a modern office, an archaic and irrelevant requirement, is a glaring example of how outdated regulations can become tools for extortion.
• Similarly, coordinated schemes between consultants and enforcement authorities expose the corrupt underbelly of the system, posing real threats to business growth and entrepreneurial initiative.

Initiative Towards De-Regulation

• Recognising these challenges, the announcement of a high-level committee for regulatory reform in the 2025 Budget is a promising step.
• The committee aims to address what the authors term regulatory cholesterol, the bloated and tangled web of inspections, permits, and no-objection certificates (NOCs) that strangle business activity, especially in low-risk domains.
• A more effective model would be to shift from inspector-led approvals to self-certification for low-risk sectors.
• Lessons can be drawn from best practices within India and Southeast Asia, where third-party certifications and digital processes streamline business compliance.
• For instance, automated systems could be used to grant construction NOCs based on geotagged data, especially for buildings not obstructing flight paths or critical infrastructure.

Further Reforms Required for Sustainable Economic Growth

• Reforming Factor Markets: Land and Labour Reforms
  • Sustainable economic growth also requires reforms in factor markets, particularly land and labour.
  • Land acquisition processes remain complex, with overlapping restrictions and zoning regulations.
  • Simplifying land-use conversion and building byelaws can make industrial land more accessible.
  • Labour laws present a similar challenge. India’s rigid and outdated labour framework is misaligned with the evolving nature of work.
  • In particular, the rise of gig work, a flexible, technology-driven employment model, needs to be acknowledged in law.
  • Current efforts in some states to treat gig workers as full-time employees risk imposing unsustainable compliance burdens on platforms and employers.
  • Instead, a flexible legal framework that protects workers' rights without stifling the economic model is needed.
• Transparency and Procedural Clarity
  • Transparency and procedural clarity are equally critical.
  • All required approvals, documentation, and checklists should be available publicly and online, ensuring that businesses are not caught in discretionary or opaque processes.
  • Regular inspections, where necessary, should be harmonised across departments, notified in advance, and conducted jointly with a single checklist to eliminate redundancy and corruption.
• Cultural Change in Bureaucracy and Performance Metrics
  • Reforms must not be confined to procedures; they must extend to mindset.
  • The prevailing attitude among regulators is one of distrust towards entrepreneurs, treating business growth as something to control rather than enable. Changing this approach requires a cultural shift.
  • One transformative proposal is to include metrics such as investment facilitation and economic development in the performance evaluation of government departments.
  • Such institutional alignment could create a bureaucracy that supports, rather than hinders, business development.

The Way Forward to Repeat 1991 Moment: Microeconomic Reforms for Macro Growth

• Today, while India continues to benefit from stable monetary and fiscal policies, achieving the goal of becoming a developed nation by 2047 requires it to replicate that success through microeconomic reform.
• A sustained growth rate of 8% annually is essential, especially given global headwinds such as trade wars and supply chain disruptions.
• While India cannot control global forces, it can, through domestic deregulation and institutional reform, unlock internal growth engines.
• Removing regulatory bottlenecks and building a business-friendly ecosystem are crucial levers in this regard.

Conclusion

• India's service-led growth model is a testament to its entrepreneurial spirit and adaptability.
• However, realising its long-term economic ambitions will require balanced growth driven by both services and manufacturing.
• That, in turn, necessitates a bold and sustained push to deregulate, digitise, and democratisethe business environment.
• India must rise to this 1991-like moment, not out of crisis, but out of opportunity, to shape a truly developed economy by 2047.