Shrimp, Scotch and Strategy: India’s new trade doctrine in action 

Prime Minister Narendra Modi (left) and UK Prime Minister Keir Starmer may have headlined the moment at Chequers, but the real action lies in the policy recalibration this agreement presents.

Whisky for access and seafood for strategy. The freshly signed India-UK Comprehensive Economic and Trade Agreement (CETA) is not just about goods crossing borders but about what it signals: a transformation in India’s identity as a trading nation.

For a country long wary of opening its doors too wide, especially to sensitive sectors like automobiles and alcohol, this deal marks a decisive shift in its trade policy. Prime Minister Narendra Modi and UK Prime Minister Keir Starmer may have headlined the moment at Chequers, but the real action lies in the policy recalibration this agreement presents.

For years, India’s trade strategy has been guided by caution, a desire to promote self-reliance, shield the domestic industry, and retain strategic policy levers. With this agreement, India has signalled its willingness to trade some of those levers in return for greater global market access. The question is not whether India gains from this CETA - it clearly does - but whether the concessions made now will serve or undermine the country’s long-term objectives.

The Gains: Tariff-Free Access in Labour-Intensive Sectors

At the heart of India’s negotiation strategy was a clear focus on job-rich export sectors. The UK has agreed to eliminate import duties, some as high as 20%, on a wide range of Indian goods, including textiles, footwear, gems and jewellery, and marine products. These sectors not only contribute significantly to India’s exports but also employ millions, especially in small and medium-sized enterprises across Tamil Nadu, Gujarat, West Bengal, and Uttar Pradesh.

For instance, the Indian textile industry employs over 45 million people and contributes approximately 12% to the country’s export earnings. Eliminating tariffs in the UK could give Indian manufacturers a new competitive edge, particularly as they face stiff competition from countries such as Bangladesh, Vietnam, and Turkey.

Even more notable is the tariff reduction across nearly 99.7% of India’s food-related tariff lines, including those for marine and dairy products. Previously, many of these faced tariffs as high as 70% in the UK. This move is expected to benefit farmers, fisheries, and agro-processors and aligns with India’s ambitions to become a global agri-export powerhouse.

The Concessions: Cracks in the Protectionist Wall

However, these gains did not come without sacrifice. For the first time, India has agreed to reduce import duties on UK-origin alcoholic beverages, a category that has long been kept under heavy protection. Premium spirits like Scotch whisky, vodka, and rum, which currently face a base customs duty of 150%, will see duties reduced to 75% over 10 years, provided they meet a Minimum Import Price (MIP) of $5 per litre or $6 per 750 ml bottle.

This is no accident; it is a strategic compromise. The MIP ensures that only premium products benefit, shielding the domestic industry from cheap imports while opening the door to high-value market growth. As British exporters eye India’s growing middle class, this phased reduction could help formalise and upscale the country’s alcohol market.

India has also agreed to open its public procurement system, previously guarded under the ‘Make in India’ rules, to UK companies. UK firms can now bid for government contracts under Class II supplier status, provided they meet a 20-50% domestic value addition threshold. While this offers the possibility of improved procurement efficiency and access to global technology, it also risks sidelining Indian MSMEs, which have historically benefited from government tenders.

Most controversially, India seems to have yielded ground on Intellectual Property Rights (IPR). The deal allows UK patent holders to issue voluntary licences and delays India’s right to demand information on how a patent is being used for up to three years. This could undermine India’s ability to ensure affordable access to medicines, especially generics, which is a vital public health concern in a country where nearly 70% of healthcare costs are borne out of pocket.

A Strategic Recalibration, not a Capitulation

What we are witnessing is not a retreat from protectionism but a recalibration of India’s trade strategy. Although significant, the concessions are structured. By using phased liberalisation, minimum pricing thresholds, and value addition rules, India is carefully walking the line between global integration and domestic resilience.

Seen in a broader context, this deal complements India’s decision to walk away from the Regional Comprehensive Economic Partnership (RCEP) in 2019 over concerns about Chinese imports. Instead of embracing multilateralism on unfavourable terms, India is now seeking bilateral agreements with high-income economies that offer meaningful and reciprocal access.

The UK CETA, much like India’s earlier trade deals with Australia and the UAE, reflects a deliberate pivot: deepening trade with the West while ensuring politically palatable domestic concessions. In that sense, the MIP for alcohol is more than a safeguard; it is a policy innovation that could inform India’s future tariff design across sectors.

Another telling dimension of this agreement is India’s quiet move to diversify away from its overdependence on China in critical export sectors. Seafood is an example of this. China has long been one of India’s largest buyers of frozen shrimp and marine products, but the trade relationship has been fraught with non-tariff barriers, customs hold-ups, and occasional bans on imports. By securing zero-tariff access for seafood and meat in the UK, where duties previously went up to 20%, India is signalling a shift toward diversifying its markets. This is less about abruptly cutting exports to China and more about building reliable and high-income alternatives. The UK’s premium market offers predictability, traceability standards, and pricing stability - qualities increasingly valued by Indian exporters. In this sense, this CETA also supports India’s broader strategy of “de-risking without decoupling” from China.

The Precedent Problem: A Template for Future CETAs

However, the bigger concern is precedent. By allowing UK firms access to public procurement and relaxing IPR norms, India has set a bar that other trade partners, particularly the EU and the US, will now expect to meet or exceed in future trade agreements. In future negotiations, India may find it harder to resist similar demands, potentially limiting its ability to use industrial policy tools in strategic sectors.

This could have real implications for Atmanirbhar Bharat, which relies on government spending and procurement to boost local production in the long run. If foreign firms can qualify for these contracts with minimal Indian content, it may dilute the developmental impact of such policies on the Indian economy.

Furthermore, while the agreement is extensive in terms of goods, talks on the Bilateral Investment Treaty (BIT) are still ongoing. Given investor concerns over India’s retrospective taxation history and judicial unpredictability, the investment chapter could prove to be trickier than tariffs.

Services, Social Security, and Skilled Labour Mobility

An underrated highlight of the deal is the conclusion of the social security pact, which allows Indian professionals working temporarily in the UK to avoid paying into both the Indian and British social security systems. This could improve the cost competitiveness of Indian IT and consultancy firms and incentivise short-term cross-border work, something India has long advocated.

However, deeper liberalisation of the services sector remains elusive. Mutual recognition of professional qualifications, easier visa access for Indian workers, and greater access to financial or legal services markets in the UK were not part of this agreement and remain areas for future negotiations.

Looking ahead: Can India walk this tightrope?

With this agreement, India has opened several doors, some confidently and others cautiously. The strategic intent is clear: grow exports, attract investment, and build credibility as a reliable trading partner. However, the path ahead is narrow. 

The real challenge is alignment. Can India use CETA gains to deepen domestic supply chains for seafood, textiles, and processed foods? Can procurement reforms be structured to support innovation while protecting MSMEs? Will future deals build upon this model or force further concessions?

A trade deal is never just about tariffs; it is about the story a country tells about itself. However, with the India-UK CETA, this narrative is changing. India is no longer a hesitant participant in global trade. It is now a negotiator with ambition, willing to make tactical retreats in the service of strategic goals.

Conclusion: Turning Trade into Strategy

The India-UK CETA is not perfect but pragmatic. It acknowledges that in an increasingly fragmented global economy, waiting on the sidelines is not an option. It shifts the conversation from protection to preparedness and from ideology to instrumentality.

As India eyes similar deals with the EU, Canada, and the US, CETA could serve as a template if handled with care. The key lies in policy coherence: using trade to reinforce, not replace, industrial strategy. As cheaper Scotch begins to pour in and Indian shrimp sets sail for British shores, one thing is clear: India’s trade playbook is changing. This may be for the better. 

(Bidisha Bhattacharya is Senior Research Consultant, Chintan Research Foundation)

Views are personal and do not represent the stand of this publication.