UK-EU Reset: A Strategic Opening for India

06-06-2025

Why in the News:

The UK and European Union (EU) have agreed to restart cooperation on food standards, fishing rights, and defence (UK-EU Reset).
This signals a major diplomatic shift in their post-Brexit relationship.
This reset is expected to impact global trade, regulations, and diplomacy.

India-UK Relations:

2004: Strategic Partnership launched.

2010: Elevated to Enhanced Partnership.

2021: Roadmap 2030 signed for comprehensive cooperation.

2022: Comprehensive Strategic Partnership covering cyber security, climate action, and maritime security.

India-EU Relations:

1994: First India-EU Cooperation Agreement.

2004: India-EU Strategic Partnership initiated.

2020: ‘India – EU Strategic Partnership: A Roadmap to 2025’ adopted.

2021 – Connectivity Partnerships

2022 - India-EU Trade and Technology Council.

Brexit:

Brexit, which happened in January 2020, ended the UK’s EU membership, changing trade and political relations.

It led to new rules on borders, customs, and cooperation between the UK and EU.

Key Highlights of the article:

UK-EU Agreement Brings Big Changes
1. The UK and EU have started working together again after Brexit.
2. They will now cooperate on food standards, fishing rights, defence, and border checks.
3. This new partnership can affect how trade and policies are made globally as it sets standards for future agreements and cooperation frameworks.
4. It could change India’s strategy in dealing with both the UK and EU.
Impact on Indian Exports
1. India exported goods worth $86 billion to the EU and $12 billion to the UK in FY2024.
2. Key sectors like medicines, seafood, and farm products can benefit from smoother trade rules.
3. Common rules between the UK and EU will reduce paperwork and delays as the standards will be similar and this will reduce the need for extra checks.
4. However, small Indian companies may struggle with stricter rules and higher costs. Example: A textile exporter paying more to comply with product standards.
New Opportunities in Diplomacy
1. India can work more closely with both the UK and the EU on defence and foreign policy.
2. It gives India more chances to be part of global talks on climate change, security, and technology.
3. India can use platforms like the G20 and UN to strengthen its position.
4. Stronger ties with a united UK-EU can help India deal with challenges in the Indo-Pacific.
Better Education and Job Prospects Abroad
1. India sent over 1,00,000 students to the EU in 2024, showing growing educational links.
2. Easier border movement between the UK and EU can help Indian workers and students.
3. This can also support India's ties with Germany, France, and Portugal.
4. A common travel system in Europe could help Indians move, study, and work more easily.
Sector-wise Benefits and Risks
1. Pharma: India supplies 25% of UK’s medicines. Faster approvals can lower costs.
2. Seafood: Exports worth around ₹60,523 crore may rise if rules match between UK and EU.
3. Trade Support: India needs to boost support schemes like RoDTEP and PLI to stay competitive.
4. Risk: Small businesses may not have the money or skills to meet tough new standards.

RoDTEP (Remission of Duties and Taxes on Exported Products):

It is a government scheme that gives refunds on hidden taxes and duties paid during production and export, which were not refunded earlier.

These include taxes on fuel, electricity, and transport that increase the cost of exported goods.

The aim is to make Indian products cheaper and more attractive in foreign markets.

It helps especially small exporters compete better by lowering their overall costs.

PLI (Production Linked Incentive) Scheme:

This scheme gives financial rewards to companies that increase their production in specific sectors like electronics, pharma, and textiles.

The government pays incentives based on how much extra a company produces and sells.

It encourages companies to make more in India instead of importing from other countries.

PLI helps create jobs, boost exports, and bring in new investment into the country.

Possibilities for India:

For Indian Exporters:
1. Lower trade barriers can reduce costs and increase profits.
2. Helps improve supply chain efficiency by reducing duplication of efforts.
For Policy Makers
1. Opportunity to strengthen strategic alliances.
2. Can align trade rules with UK-EU to make exports more competitive.
3. Helps identify key sectors for export growth and investment.
4. Useful for designing better incentives and trade agreements.
For Indian Diaspora
1. Easier movement between the UK and EU helps students and professionals.
2. More job and education options in both regions.
3. Can support better integration of Indian communities abroad.
4. Helps strengthen people-to-people connections, creating goodwill for India.
Trade Corridors
1. Possibility of creating a smooth, UK-EU-India trade corridor.
2. Promotes easy goods movement between all three regions.
3. Can boost India’s trade links with countries like Germany, France, and Portugal.
4. Makes India an important part of the Europe-Asia trade network.
Diplomatic Engagements (Indo-Pacific and Global South)
1. India can partner with the UK-EU in regional defence and maritime security in the Indo-Pacific to deal with China’s assertiveness.
2. Joint voice with UK-EU on climate change, technology, and global finance.
3. Enhances India’s leadership role in the Global South.
4. Opens doors for new multilateral partnerships and global decision-making.
Soft Power Leverage in the West
1. India's cultural influence can grow with better diaspora presence and mobility.
2. More Indian students in the EU build long-term goodwill.
3. Strategic role in digital infrastructure and governance improves India's global image.
4. India becomes a key partner for a united and strong West.

Challenges and Way Forward

Challenges for India	Description	Way Forward	Action Points
Stricter Standards	UK-EU alignment may lead to higher product and safety norms. MSMEs may lack capital, tech, and skills to comply. Risk of product rejection and market loss.	Strengthen Export Ecosystem	Support MSMEs through schemes like RoDTEP and PLI. Lower production costs and boost competitiveness.
Export Barriers	Compliance with technical regulations increases costs. Requires more testing, certification, and paperwork. Reduced margins discourage new exporters.	Improve Regulatory Preparedness	Update Indian standards to align with global norms. Help MSMEs adopt new requirements through financial and technical assistance.
Post-Brexit Restrictions	Brexit-related mobility hurdles remain. Visa and work restrictions for Indian professionals. Limited recognition of qualifications delays migration.	Negotiate Smartly	Ensure trade and mobility deals safeguard Indian professionals and students. Push for mutual recognition of qualifications.
Dependency Risks	Over-reliance on UK-EU may hurt India if ties deteriorate. Could limit foreign policy autonomy and reduce space for relations with other powers like Russia or China.	Enhance Strategic DialogueLeverage Diaspora	Engage in global platforms (G-20, UN, Indo-Pacific) to voice India’s concerns. Use the Indian diaspora to deepen educational, cultural, and business links with UK and EU. Maintain balance in international relations.

Ensure IAS Mains Question:

Q. “The post-Brexit UK-EU reset offers both strategic opportunities and policy challenges for India.” Discuss with reference to trade, diaspora, and geopolitical engagement. (250 words)

Ensure IAS Prelims question:

Q. Consider the following statements about India’s trade and diplomatic engagement with the UK and EU:

India’s exports to the European Union (EU) are significantly higher than to the United Kingdom (UK).
The RoDTEP scheme provides incentives for domestic manufacturing in selected sectors.
A stronger UK-EU partnership may help Indian professionals move more easily between both regions.

Which of the statements given above is/are correct?

1 and 2 only
2 and 3 only
1 and 3 only
1, 2 and 3

Answer: c

Explanation:

Statement 1 is correct: In FY 2023–24, India’s exports to the EU were approximately $86 billion, whereas exports to the UK were around $12 billion. The EU, being a group of multiple countries, naturally represents a much larger market than the UK. As a result, trade volumes with the EU are significantly higher, especially in sectors like engineering goods, pharma, textiles, and machinery.

Statement 2 is not correct: The RoDTEP (Remission of Duties and Taxes on Exported Products) scheme is not designed to incentivize domestic manufacturing directly. Instead, it aims to refund embedded taxes and duties (like on fuel, electricity, and transportation) that are not rebated under other export schemes. These refunds are provided as a percentage of the export value. Unlike the PLI (Production Linked Incentive) scheme, which rewards companies for increased manufacturing output, RoDTEP focuses solely on export cost competitiveness.

Statement 3 is correct: Improved cooperation between the UK and EU post-Brexit could lead to simplified mobility frameworks, benefiting international professionals, including those from India. Earlier, movement between the UK and EU had become restrictive due to Brexit. A renewed partnership can pave the way for mutual recognition of skills, visas, and work permits, enabling Indian students, tech workers, and healthcare professionals to move and work across both regions more freely. It also helps in creating more uniform rules for migration and qualifications, enhancing job and education prospects for Indians abroad.

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UK-EU Reset: A Strategic Opening for India

India-Central Asia Connectivity and Trade

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