India & UK FTA: India’s Maturing Global Presence

Syllabus: GS2/International Relations; GS3/Economy

Context

• The India-UK Free Trade Agreement (FTA) marks a significant milestone in India’s global trade strategy, signaling its transition from a cost-driven export economy to a value-creating powerhouse.

Key Points in the India-UK FTA – Zero-Duty Access for Indian Exports: The deal eliminates import tariffs on over 99.3% of animal products, 99.8% of vegetable/oil products, and 99.7% of processed foods, making Indian goods more competitive in the UK market. – Expanding Trade Partnership: The UK currently imports goods worth $815.5 billion, primarily from China (12%), the US (11%), and Germany (9%). 1. India holds about 1.8% share ($15.3 billion) in UK imports, ranking as the UK’s 12th largest trading partner. – India-UK Trade Goals for 2030: As of 2024, India-UK trade in goods amounted to $23.3 billion, with $8.06 billion in UK exports to India. 1. The FTA sets an ambitious target of reaching $120 billion in trade by 2030. 2. UK Export From India: Pearls, nuclear reactors, spirits, and vehicles. 3. UK Import From India: Machinery, mineral fuels, pharmaceuticals, apparel, and footwear. – Strategic Trade Partnerships: The agreement strengthens the India-UK Comprehensive Strategic Partnership, fostering trade, investment, innovation, and job creation. 1. India is negotiating FTAs with the EU and the US, targeting duty-free access to high-value markets.

India-UK FTA: Transformative Milestone for Indian Industry

• Levelling the Playing Field for Indian Exporters: Indian exporters in sectors like textiles, apparel, leather, marine products, and toys have long faced tariff disadvantages in the UK.
  • The FTA eliminates this gap by offering zero-duty access for nearly 99% of Indian tariff lines, aligning India with competitors from the EU, CPTPP, and countries like Bangladesh.
• Strategic Market Access Without Sacrificing Autonomy: India’s approach to the FTA has been calibrated and protective. It allows duty-free access to 85% of UK goods over 10 years.
  • It ensures that ‘Make in India’ and employment-intensive sectors remain protected.
• Unlocking the Services Sector Potential:
  • Greater market access for IT, telecom, education, and financial services.
  • Ease of professional mobility, especially through:
    • Recognition of qualifications for Indian professionals (architects, engineers, accountants, etc.)
    • Double Contribution Convention: Exempts Indian professionals from UK social security payments on short-term assignments.
  • It is a game-changer for India’s knowledge-driven exports, enhancing both competitiveness and mobility.
• Deepening Bilateral Cooperation: It paves the way for value chain innovation with global aspirations, with the UK’s strengths in design and advanced manufacturing, and India’s scale and talent. It includes:
  • Investment & joint R&D
  • Technology transfer & co-manufacturing
  • Intellectual Property (IP) creation
• Embedding Ethical and Sustainable Trade: For the first time in an Indian FTA, topics like Labour rights, Environmental protection, Consumer welfare, Gender equity, Anti-corruption are covered, signaling India’s maturing economic identity, aligning trade with global values of transparency, sustainability, and inclusivity.
• Strategic Imperatives for Indian Businesses:
  • Develop UK-specific market strategies rooted in consumer insights and localisation.
  • Invest in certifications, ESG compliance, and product innovation.
  • Reskill talent, especially in areas like finance, legal, logistics, and marketing.
  • Form joint ventures and innovation partnerships with UK firms.
  • Build feedback loops from UK market performance to refine offerings.

Challenges & Concerns

• Protection of Sensitive Sectors: India has excluded tariff reductions for sensitive agricultural products like dairy, apples, cheese, oats, and vegetable oils.
  • Industrial goods such as plastics, diamonds, smartphones, and optical fibers remain protected to safeguard domestic industries.
• Regulatory & Compliance Issues: The agreement includes provisions on digital trade, intellectual property, labor, and environmental standards, requiring policy adjustments and compliance measures.
  • Businesses will need to adapt to new trade regulations and streamline customs procedures.
• Long-Term Trade Balance & Economic Impact: While India enjoys a positive trade balance with the UK, concerns remain about whether the FTA will sustain this advantage in the long run.
  • The impact on small and medium enterprises (SMEs) and domestic manufacturers will need careful monitoring.
• Impact on Domestic Industries: While the FTA opens new opportunities, Indian manufacturers may face increased competition from UK imports, particularly in automobiles and medical devices.

Looking Ahead

• The India-UK FTA supports India’s Viksit Bharat vision by pushing Indian businesses up the global value chain, creating employment, and enhancing competitiveness.
  • It represents a strategic step forward, balancing economic growth with domestic industry protection. 
• As India navigates its evolving global trade role, effective implementation and policy safeguards will be crucial in ensuring long-term success

Progress should not just be fast but future-proof

Context

India lacks a full plan to track climate risks, so its responses are often late and unplanned.

Introduction

India’s climate future isn’t fate — it’s shaped by rising heat, unpredictable rains, and worsening disasters. Over 80% of Indians live in areas at risk, says the World Bank. From floods in the northeast to crop loss in central India, these are now serious, ongoing threats. Yet, poor planning and weak risk assessment keep India exposed, with reactive rather than proactive responses.

Escalating Climate Physical Risks (CPRs)

• Climate change is intensifying, leading to more frequent and severe extreme weather.
• CPRs go beyond just natural disasters and include:
  • Acute shocks: such as floods, heatwaves, and cyclones
  • Chronic stresses: including shifting monsoons and prolonged droughts
• Early warning systems and weather forecasts help with short-term risk reduction.
• However, CPRs demand long-term planning and climate projections, not just daily forecasts.

Mitigation vs Adaptation: The Global Dilemma

Climate Strategy	Focus Area	Current Trend	Issues
Mitigation	Reducing emissions	Majority of climate funding directed here	Skewed investments towards decarbonisation
Adaptation	Preparing for climate impacts	Underfunded despite being a global necessity	Needed by both Global South and Global North

• Events like wildfires, heatwaves, and cyclones show that adaptation is essential worldwide.
• According to the UN Environment Programme, every $1 spent on adaptation brings a $4 return through avoided economic damage.

Understanding CPRs: More Than Just Weather

• CPRs are determined by more than extreme events; they depend on:
  • Hazard: Nature of the event (e.g., floods, heatwaves)
  • Exposure: Who or what is in harm’s way (people, assets, infrastructure)
  • Vulnerability: Ability to resist, cope with, and recover from the hazard

CPR Component	Description
Hazard	Type of event (e.g., flood, cyclone, drought)
Exposure	Populations and assets at risk
Vulnerability	Capacity to withstand and bounce back

• Together, these three elements determine the true scale of climate risk.

Financial Stability and Climate Risk Reporting

• Regulators worldwide are shifting from voluntary to mandatory climate risk disclosures.
• In India:
  • Reserve Bank of India (RBI) is integrating climate risk into regulation.
  • IFRS ISSB S2 sets a global standard for CPR disclosures.
• CPR assessments are now critical for business continuity, not just environmental goals.

India’s Fragmented CPR Assessment Landscape

• India’s CPR assessment remains scattered and inconsistent across sectors:
  • Multiple agencies and platforms use different data and methods
  • No unified national framework like in the U.S., U.K., or New Zealand

Source/Agency	Contribution	Limitation
IIT Gandhinagar	Flood maps	Localised, not standardised nationally
India Meteorological Department (IMD)	Vulnerability Atlases	Not integrated with other datasets
National Institute of Disaster Management	Disaster Risk Frameworks	Not linked to climate projections

• Climate models like Representative Concentration Pathways (RCPs) and Shared Socioeconomic Pathways (SSPs):
  • Are designed globally, but miss India’s local climate realities
• The absence of a centralised climate data repository hampers informed decision-making by businesses and policymakers.

Steps taken to fill the gaps

• Recognising existing gaps, India has taken steps to incorporate climate hazards into its National Adaptation Plan (NAP), aligned with Article 7 of the Paris Agreement, which requires all countries to develop NAPs by 2025 and show progress by 2030.
• To support this, India prepared an Adaptation Communication and submitted its first report in 2023. A more detailed NAP report is in progress, addressing nine thematic sectors with district-level detail.
• Although this is a positive beginning, India needs to advance by developing a Climate Physical Risk (CPR) assessment tool to aid both public and private sectors in decision-making.
• Such a tool will help the public sector create climate-resilient policies, plan infrastructure efficiently, and allocate resources effectively.
• For the private sector, it will facilitate risk assessment across value chains, guide operational and expansion strategies, and meet increasing investor expectations.

Conclusion

The creation of an India-specific framework is essential—one that integrates localised climate models, granular risk assessments, a centralised climate risk data hub, and transparent, science-driven methodologies supported by iterative feedback loops. As India advances towards Viksit Bharat, such robust climate risk assessments are crucial to ensure that development is not only accelerated but also resilient and future-ready.