India-UK trade pact expected to come into force by first half of 2026: British envoy

The impending India-UK Free Trade Agreement (FTA), expected to come into force by the first half of 2026, marks a significant milestone in the evolving economic relationship between these two historically linked nations. This pact is not merely a bilateral trade deal; it's a strategic move reflecting post-Brexit UK's global ambitions and India's assertive economic diplomacy on the world stage.

**Background Context and What Happened:**

Following its departure from the European Union in January 2020, the United Kingdom embarked on a mission to forge new trade partnerships globally, aiming to offset the economic impact of leaving the EU single market and customs union. India, with its rapidly growing economy, vast consumer base, and increasing geopolitical influence, emerged as a prime candidate for a comprehensive trade deal. For India, an FTA with the UK offers diversified market access, technology transfer opportunities, and strengthens its position as a global manufacturing hub. Formal negotiations for the India-UK FTA were launched in January 2022, with both sides expressing strong political will to conclude the talks swiftly. The agreement aims to significantly boost bilateral trade, which stood at around USD 36 billion in 2022-23, by reducing tariffs and non-tariff barriers across various sectors. A key feature highlighted is the provision for Indian exporters to gain duty-free access to the UK market for most products, a crucial advantage for sectors like textiles, leather, pharmaceuticals, and automotive components.

**Key Stakeholders Involved:**

On the Indian side, the Ministry of Commerce and Industry, led by the Union Minister, has been the primary negotiating body, supported by various other ministries like Finance, External Affairs, and Agriculture. Indian industry bodies such as the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce & Industry (FICCI) have actively contributed inputs and advocated for their respective sectors. For the UK, the Department for Business and Trade (formerly the Department for International Trade) has spearheaded the negotiations. British industry groups like the UK India Business Council (UKIBC) and the Confederation of British Industry (CBI) have also played a crucial role in representing business interests. Beyond governments and industry, specific sectors like services (IT, financial services), manufacturing (automobiles, machinery), and agriculture are direct stakeholders, eager to leverage new market access or concerned about potential competition.

**Significance for India:**

This FTA holds immense significance for India across economic, political, and social dimensions. Economically, duty-free access to the UK, a developed and high-value market, will significantly boost Indian exports, potentially creating millions of jobs and contributing to economic growth. It will particularly benefit labour-intensive sectors, aligning with the 'Make in India' initiative. Enhanced trade will also encourage foreign direct investment (FDI) into India, as British companies seek to expand their presence in the Indian market and utilize India as a production base. Politically, the deal strengthens India's strategic partnership with the UK, a P5 nation and a key player in global affairs. It underscores India's growing confidence in engaging with major economies and its commitment to economic liberalization. Socially, increased trade and investment can lead to skill development, technology transfer, and improved living standards through job creation and greater economic opportunities.

**Historical Context and Future Implications:**

The economic relationship between India and the UK has deep historical roots, stemming from the colonial era. Post-independence, trade relations evolved, with the UK remaining a significant partner, though its importance diminished somewhat after its entry into the European Economic Community (EEC) in 1973. The current FTA marks a recalibration, moving beyond historical ties to forge a modern, mutually beneficial partnership. Looking ahead, the implementation of this FTA by 2026 is expected to set a new trajectory for bilateral trade, potentially doubling it in the coming years. It could also pave the way for deeper cooperation in areas like digital trade, intellectual property, and climate change. However, challenges such as non-tariff barriers, regulatory divergence, and geopolitical shifts will require continuous engagement and adaptation. This deal will also be keenly watched by other nations currently negotiating FTAs with India, potentially influencing the pace and scope of those agreements, such as those with the European Union and the Gulf Cooperation Council (GCC).

**Related Constitutional Articles, Acts, or Policies:**

India's engagement in international trade agreements is governed by its constitutional framework and specific legislation. **Article 253** of the Indian Constitution empowers Parliament to make any law for implementing any treaty, agreement, or convention with any other country or any decision made at any international conference, association, or other body. This provides the legislative backing for domestic laws to incorporate the provisions of an international trade pact like the India-UK FTA. Furthermore, **Article 246** read with the Seventh Schedule (Union List, Entry 14) grants the Union Parliament exclusive power to legislate on 'entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries.' The **Foreign Trade (Development and Regulation) Act, 1992**, provides the legal framework for the development and regulation of foreign trade in India. The current **Foreign Trade Policy (FTP)** of India also outlines the government's strategy for boosting exports and integrating India into the global economy, of which FTAs are a critical component. These legal and policy instruments collectively enable India to negotiate, sign, and implement such complex international trade agreements effectively.