Impact Assessment of the India–UK Free Trade Agreement on Bilateral Trade and South Asian Economic Dynamics

Abstract

The India–UK Free Trade Agreement (FTA), formally referred to as the Comprehensive Economic and Trade Agreement (CETA), was signed on July 24, 2025, after nearly three years of negotiations, amid a global environment marked by rising geopolitical tensions. The deal represents important transformation in the United Kingdom’s economic policy while also indicating changes in the global trading system influenced by India’s emergence as a crucial economic power. By adopting an analytical and descriptive framework, the study examines the deal’s potential effects on South Asia, highlighting its capacity to strengthen the supply-chain connectivity as well as its possibility of causing trade diversion. This paper argues that India’s expanding economic engagement with Western powers could unintentionally widens regional inequalities and political sensitivities. It further highlights the needs to strengthen the intra-regional trade cooperation within South Asia to reduce such hurdles and challenges.