India-UK Free Trade Agreement predicted to enhance electronic goods exports

India-UK Free Trade Agreement predicted to enhance electronic goods exports

The India-UK Comprehensive Economic and Trade Agreement (CETA) was announced on a momentous day, marking a significant milestone in the strategic approach to international commerce for both countries. This agreement is expected to have a profound impact on India's IT services sector, digital collaboration, and electronics industry, particularly in key states like Karnataka, Tamil Nadu, Telangana, and Maharashtra.

IT Services Sector and Digital Collaboration:

The CETA agreement offers enhanced market access and guarantees for services, including IT/ITeS, telecom, financial, legal, and engineering sectors. This facilitates smoother business operations between India and the UK. The agreement also enables easier mobility for professionals such as architects, engineers, and IT experts, through simplified visa norms and streamlined pathways for intra-corporate transferees, contractual service suppliers, and independent professionals.

CETA supports secure cross-border data flows and recognition of digital signatures and electronic contracts, promoting seamless digital trade and collaboration. This fosters stronger digital integration and innovation partnerships. By lowering overseas operational costs and improving professional mobility, the agreement is poised to boost service exports from Indian IT hubs in Karnataka, Telangana, Maharashtra, and Tamil Nadu.

Electronics Industry:

CETA eliminates tariffs on electronic exports, including smartphones and components, which is significant since states like Tamil Nadu and Maharashtra have substantial electronics manufacturing bases. Zero-duty access enhances the competitiveness of Indian electronics exporters in the UK market, enabling growth in exports and encouraging investment in production capacity and innovation.

The reduction in tariffs on advanced manufacturing equipment will benefit MSMEs and large manufacturers by decreasing input costs and facilitating integration into global value chains.

Broader Economic Impact in Target States:

Karnataka, Telangana, Maharashtra, and Tamil Nadu are leading states in software exports, electronics manufacturing, and high-skilled service sectors. They stand to benefit from increased trade, investment, and job creation enabled by CETA’s market access and professional mobility provisions.

MSMEs in these states will gain from faster customs processing, digital trade facilitation, and an SME-friendly framework under CETA, helping them integrate with global supply chains and expand their UK market presence. The agreement’s emphasis on collaboration in technology, innovation, and clean energy under the India-UK Vision 2035 roadmap further positions these states to leverage CETA for sustainable growth.

In summary, CETA offers duty-free market access, stronger legal frameworks for digital trade, and enhanced movement of professionals, which together will significantly boost India's IT services exports, deepen digital collaboration, and expand electronics manufacturing and exports from major Indian states including Karnataka, Tamil Nadu, Telangana, and Maharashtra.

The partnership between India and the UK is projected to double bilateral trade by 2030 and India's domestic electronics manufacturing ecosystem is targeted to reach $500 billion. The FTA is seen as a testament to the strengthening economic ties between India and the UK, with potential significant gains in areas like FinTech, AI, and Data Analytics. Reduced trade barriers and better access to specialized components can help streamline global operations and sourcing, as believed by Mukesh Vasani, CEO of Aimtron Electronics manufacturing company.

The India-UK FTA covers nearly 100% of bilateral trade value and strengthens supply chain resilience and advances cooperation in green and sustainable electronics, according to Ashok Chandak, President at SEMI India and IESA. The agreement is another significant milestone following substantial FTAs with the UAE, the European Free Trade Association (EFTA), and Australia.

[1] The Economic Times [2] Livemint [3] Business Standard [4] Financial Express [5] India Today

1. The India-UK Comprehensive Economic and Trade Agreement (CETA) opens up opportunities for enhanced service exports, particularly in India's IT services sector, as it guarantees access for IT/ITeS, telecom, financial, legal, and engineering services.
2. The agreement facilitates easier mobility for professionals such as architects, engineers, and IT experts, through simplified visa norms and streamlined pathways for intra-corporate transferees, contractual service suppliers, and independent professionals.
3. For the electronics industry, CETA eliminates tariffs on electronic exports, including smartphones and components, benefiting states like Tamil Nadu and Maharashtra with substantial electronics manufacturing bases.
4. In the broader economic context, Karnataka, Telangana, Maharashtra, and Tamil Nadu, leading states in software exports, electronics manufacturing, and high-skilled service sectors, stand to benefit from increased trade, investment, and job creation enabled by CETA.
5. The agreement will help MSMEs in these states by offering faster customs processing, digital trade facilitation, and an SME-friendly framework, enabling them to integrate with global supply chains and expand their UK market presence.
6. The partnership between India and the UK is expected to double bilateral trade by 2030, with potential significant gains in areas like FinTech, AI, and Data Analytics, and the India-UK FTA covers nearly 100% of bilateral trade value, strengthening supply chain resilience and advancing cooperation in green and sustainable electronics.

Read also: