From market access to market success: India-UK CETA and Kerala’s new opportunities

The global economy has been undergoing a profound transformation. Rapid technological changes, expansion of the digital economy, reorganisation of the global supply chains, climate concerns, geopolitical tensions and post-pandemic restructuring of the economic relations have essentially altered the nature of international trade.

Trade agreements, therefore, are no longer concerned merely with reducing customs duties. In the emerging global economic order, competitiveness is increasingly determined by quality, technology, innovation, digital capability, intellectual property, regulatory compliance, environmental standards and the capacity to participate adequately in the global value chains. Production may take place across several countries, with research, component manufacturing, final assembly, marketing and distribution all located in different parts of the world. The challenge for nations is consequently not only to produce goods at competitive prices, but also to secure a meaningful position in these global production and supply networks.

It is against this background that the India-UK Comprehensive Economic and Trade Agreement (CETA) should be viewed. Signed on 24 July 2025 and brought into force on 15 July 2026, the agreement represents a significant milestone in the economic relationship between India and the United Kingdom. It is more than a conventional Free Trade Agreement. It provides a broader framework for cooperation in trade in goods and services, customs and trade facilitation, professional mobility, standards and regulatory matters, digital trade and sustainable economic development.

One of the most important features of the agreement is the substantial expansion of market access. From its entry into force, 99 per cent of Indian goods entering the UK are eligible for duty-free access, while tariffs on a large share of UK exports to India are reduced or eliminated according to agreed schedules. The agreement also offers significant opportunities in services, including IT and IT-enabled services, business and professional services, education and healthcare. Arrangements concerning the temporary movement of professionals and the avoidance of double social-security contributions further strengthen the prospects for skilled Indian workers and service providers.

For Kerala, these developments could open an important new chapter. The state possesses considerable strengths in natural resources, human capital, social development, knowledge-based services and export-oriented industries. The UK’s large, high-income consumer market and its growing demand for quality, healthy, sustainable and value-added products create opportunities for several sectors in Kerala.

Marine products, spices, tea, coffee, rubber, coir, handloom and processed foods could gain from improved access to the UK market. Kerala’s real opportunity, however, lies not in exporting raw materials alone but in moving steadily towards high-value, branded and knowledge-intensive products. Branded spice mixes, essential oils, spice extracts, organic foods, nutraceuticals and ready-to-eat products, for example, can generate greater value, income and employment than the export of unprocessed commodities.

The same applies to Kerala’s coconut, jackfruit, banana and tapioca-based products, which can respond to growing demand for healthy and convenient food. Ayurveda and wellness services offer another major opportunity. Kerala can further strengthen its international position through high-quality Ayurvedic products, herbal cosmetics, wellness centres and health tourism.

The agreement could also support Kerala’s growing knowledge economy. IT parks and technology institutions can expand collaboration in artificial intelligence, cybersecurity, fintech, health-tech, cloud computing and digital transformation. Universities and research institutions can build partnerships with UK counterparts through joint research, student and faculty exchanges, innovation programmes and technology collaboration. The healthcare sector, too, offers potential in telemedicine, medical tourism, nursing, healthcare education and health technology.

An especially significant development in this context is the commencement of gateway EXIM operations at Vizhinjam International Seaport. With customs clearance enabling the port to handle export and import cargo, Vizhinjam is moving beyond its original role as a transhipment hub. This can substantially improve Kerala’s integration with international shipping networks and create new possibilities for logistics, warehousing, processing and port-led industrial development.

This development gives practical meaning to the larger objective of the India-UK CETA. A trade agreement can provide Market Access, but efficient ports, reliable logistics, modern cold chains and efficient customs procedures are necessary to convert that access into Market Success.

Kerala must therefore pursue a focused strategy: strengthen export infrastructure; promote value addition and branding; support MSMEs with finance, certification and digital marketing; develop relevant skills; connect start-ups with global markets; position GI products as premium international brands; and establish stronger research and innovation partnerships with the UK.

A dedicated Kerala-UK Trade Facilitation Cell could help exporters understand CETA provisions, rules of origin, market opportunities, quality standards and regulatory requirements. This is particularly important because preferential market access alone does not exempt exporters from the UK’s food-safety, biosecurity and technical requirements.

The central challenge for Kerala is clear: it must move from raw materials to value-added products, from isolated exports to global value chains, and from market access to market success. If the opportunities created by the India-UK CETA are effectively combined with innovation, quality, skilled human resources, and the emerging logistics advantages of Vizhinjam, Kerala can strengthen its position as an important participant in the evolving global economy.

The writer is a former Dean, faculty of commerce and UGC emeritus fellow, University of Kerala, Thiruvananthapuram Email: dr.sarngadhran@gmail.com