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India-UK Trade Deal Set to Boost FDI and Strategic Sectors: ASSOCHAM Chief
- The India-UK CETA is anticipated to unlock billions in foreign direct investment across key sectors.
- Major benefits projected for defence, agri-tech, med-tech, and automation industries.
- India to be positioned as a global manufacturing hub leveraging UK capital and technology.
The India-UK Comprehensive Economic Trade Agreement (CETA) is poised to become a game-changer in foreign direct investment (FDI) inflows into India, setting the stage for deeper economic engagement and enhanced mutual trust between the two nations. According to Sanjay Nayar, President of ASSOCHAM and Founder-Chairman of Sorin Investment Fund, the agreement represents a new chapter in Indo-UK trade relations and is expected to attract billions of dollars across key sectors.
Speaking to ANI, Nayar said, “The India-UK CETA establishes a real signal to everybody that there is mutual trust, mutual respect, and investments should flow more willingly. There’s another level of trust that has been established with this FTA”.
He believes that the trade pact sends a strong signal to global investors about the strength and reliability of the Indo-UK economic relationship. This, in turn, is expected to unlock new opportunities for investment, especially in high-potential and strategic sectors.
The agreement is designed to facilitate investment through various channels including private equity, venture capital, institutional capital, and corporate investments. Nayar noted that both greenfield and brownfield projects will benefit significantly from the new framework.
“The thesis now for investors putting capital into India will be to partner with people here who can help them scale up, use the Indian cost structure whether it's engineering or skilled labour and then sell in India as well as export back to the UK and rest of the world”, Nayar explained.
One of the most promising sectors under the new framework is defence. A comprehensive industrial roadmap has been announced by both governments, calling for deeper cooperation in defence manufacturing, joint research, and technology exchange.
“Defence startups and entities can benefit tremendously if they want to follow this defence industrial roadmap”, said Nayar. “It’s a unique and creative way of drawing more investment into aerospace and defence”.
The initiative is part of India’s broader “Make in India” strategy, aimed at enhancing domestic manufacturing capabilities while building a robust export ecosystem in strategic sectors like defence and aerospace.
Nayar also highlighted the opportunities the agreement presents in the agri-tech and med-tech sectors. India’s growing demand for capital and advanced technologies in these domains creates fertile ground for UK investment. Areas such as diagnostics, surgical equipment, and X-ray systems are seen as ideal sectors for technology transfer and capital infusion.
“We as India will need both capital and technology, which this FTA should really open up”, he noted, stressing the complementary strengths of both countries the UK’s tech expertise and India’s scalable market.
The expected FDI inflows will likely take the form of joint ventures, mergers and acquisitions, and direct private equity investments. “While I’m not sure there’s a specific target here, given the UK-India camaraderie and trust we’ve seen, we would be remiss if we don’t see very significant FDI coming into India”, Nayar stated.
He also identified industrial automation, medical automation, and defence automation as sectors that could receive substantial investments under the CETA framework. “There’s a huge opportunity in these areas where automation can really get a fillip”, he said, adding that MSMEs and startups are expected to emerge and thrive as a result.
While the agreement paves the way for two-way investment, Nayar emphasized that India’s priority is to attract UK capital rather than focusing on outbound investment.
The strategic nature of this agreement aligns with India’s long-term economic vision, including the Viksit Bharat 2047 roadmap. It is also expected to contribute significantly to the bilateral trade goal of USD 120 billion by 2030, as envisioned by Prime Ministers Narendra Modi and Keir Starmer during the formal announcement of the agreement on May 6.
Additionally, the UK government confirmed that average tariffs on UK products exported to India will drop from 15 percent to 3 percent under the FTA, significantly improving access for British businesses to Indian markets.
The India-UK CETA is not just a trade pact it is a blueprint for a strategic economic alliance that promises shared growth, innovation, and global competitiveness for both countries.
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