Significance of UK and EU for India, Key Hurdles and Solutions

Context: The renewed UK-EU agreement signals more than a regional development — it has deep implications for India’s trade, diplomacy, and diaspora, demanding timely strategic responses.

Significance of UK and EU for India

• Major Trade Partners: The European Union is India’s second-largest export destination, accounting for $86 billion in exports in FY2024.
  • The United Kingdom alone received $12 billion worth of Indian exports in the same fiscal year.
• Pharmaceutical Sector Dependence: India supplies over 25% of the UK’s generic drug requirements, playing a vital role in the British healthcare system.
  • A unified U.K.-EU regulatory regime could streamline drug approval processes, reducing costs and boosting efficiency for Indian pharma companies.
• Seafood and Agro Exports: India’s seafood exports touched ₹60,523.89 crore (~$7.38 billion) in FY2024.
  • Alignment of food safety and fisheries policies between the UK and EU can help reduce non-tariff barriers and customs delays for Indian exporters.
• Strategic and Defence Cooperation: India’s bilateral trade with France reached $15.1 billion in 2024-25.
  • India has signed key defence and technology transfer agreements with France, Germany, and the UK, which can be further deepened under a coordinated UK-EU defence policy.
• Diaspora and Education Ties: The UK issued over 1,10,000 student visas to Indian nationals in 2024, placing India among the top sources of international students.
  • A reset in UK-EU border policies could allow partial professional and academic mobility across both regions for Indian talent.
• Multilateral Cooperation Platforms: India maintains a Strategic Partnership Roadmap to 2025 with the EU and a Comprehensive Strategic Partnership with the UK.
  • Greater UK-EU alignment could strengthen India’s position at global forums like the UN, G-20, and WTO, enhancing India’s voice on issues like climate finance, digital public infrastructure, and reforms in global governance.

Key Hurdles for India

• Regulatory Complexity Post-Brexit: Since Brexit, Indian exporters have faced the burden of complying with two distinct regulatory regimes — one for the UK and another for the EU.
  • This has been especially difficult for pharmaceuticals, textiles, seafood, and agro-products, where compliance requirements are highly technical and vary by region.
• Stricter Unified Standards Could Hurt MSMEs: A harmonised UK-EU food safety and product certification regime may lead to more stringent sanitary and phytosanitary (SPS) standards.
  • Eg. in 2024, the EU food safety authorities found cancer-causing chemicals found in 527 Indian food items and banned it in the market.
• Export Ecosystem Limitations: India still struggles with logistics costs, which are around 13–14% of GDP, compared to 8–9% in developed economies.
  • The new EU Carbon Border Adjustment Mechanism (CBAM) has also been a point of dispute.
• Talent Mobility Constraints: After Brexit, Indian professionals faced reduced access to EU job markets due to the UK no longer being a bridge to Europe.
  • While over 1,10,000 student visas were granted by the UK in 2024, professional migration opportunities into the broader EU space have remained fragmented.
• Trade Defence Measures and NTBs: The EU frequently imposes anti-dumping duties and technical barriers on Indian goods.
  • Eg., India has faced anti-dumping investigations in the EU on steel, chemicals, and textiles — sectors crucial to its export profile.
• Uncertain Geopolitical Balancing: The UK-EU strategic realignment may push India to balance between transatlantic powers and its own strategic autonomy.
  • India must ensure that its deeper engagement with France and Germany is not complicated by a renewed EU foreign policy bloc that expects tighter alignment on issues like Russia, China, and human rights.

Way Forward for India

• Leverage Unified Regulatory Space: Push for streamlined export approvals, especially for pharma, seafood, and textiles.
• Support MSMEs: Expand Production-Linked Incentive (PLI) and Remission of Duties and Taxes on Exported Products (RoDTEP) to enhance product quality and compliance readiness.
• Deepen Strategic Ties: Enhance trilateral initiatives with France-Germany-UK for defence and technology cooperation.
• Negotiate Mobility Pacts: Embed talent and migration agreements within UK-EU coordinated frameworks.
• Upgrade Export Infrastructure: Invest in logistics, digital compliance systems, and standards certification.
• Amplify Global Role: Use the U.K.-EU reset to build a cohesive Western support base for India’s leadership in global governance, climate action, and digital equity.

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