UK-India: Comprehensive Economic and Trade Agreement

Lord Goldsmith Excerpts

Wednesday 4th March 2026 Grand Committee

Moved by

[Lord Goldsmith]

To move that the Grand Committee takes note of the Comprehensive Economic and Trade Agreement between the United Kingdom and the Republic of India, laid before the House on 21 January.

Relevant document: Special attention drawn by the 14th Report from the International Agreements Committee.

[Lord Goldsmith (Lab)]

My Lords, I am delighted to lead this debate on the report from the International Agreements Committee, which I was privileged to chair until late January of this year—a position I then passed to the noble Lord, Lord Johnson of Lainston, who I am delighted will be speaking today also.

The UK’s free trade agreement with India was signed in July 2025. I want to highlight at the outset that concluding any free trade agreement with India is a significant achievement. India sits behind high-tariff and non-tariff barriers to trade and is a formidable negotiating partner with a history of protectionism. In view of these challenges, the committee’s view was that the Government are to be congratulated on reaching a deal. That said, the FTA was a compromise and is not without its shortcomings, which I will come to. Under the enhanced procedures for scrutiny of free trade agreements agreed between the committee and—at the time—Her Majesty’s Government, the FTA was published on signature well ahead of being formally laid in Parliament on 21 January 2026. This allowed the International Agreements Committee to scrutinise the FTA in detail, with an inquiry running from September 2025 until January 2026.

I pay tribute to the noble Lord, Lord Grimstone, the then Minister, and the noble Baroness, Lady Hayter, then chair of the committee, who negotiated these important agreements. If we could extend what came to be called the Grimstone commitment to other treaties, at least some of the concerns that we expressed in our report on treaty scrutiny, which will be debated on 16 March, could have been avoided. I also pay tribute to the members of the committee past and present, whose experience and knowledge brought about an excellent final report. I am delighted that a number of members of the committee will be speaking today. I am going to pick out a few points in my remarks from the paper, but I respectfully draw attention to the whole report. There is a lot there. I therefore also thank our staff: Rhiannon Williams, Dom Walsh, Sophie Andrews-McCarroll, Stephanie James, Cathy Adams and Aneela Mahmood, as well as the committee’s specialist adviser, Professor Sarah Hall. I am also grateful to our witnesses, whose evidence made a vital contribution to the report, and to the Government for their constructive engagement with our inquiry.

As I say, the negotiations on the agreement were over a long period between 2022 and 2025, against what can only be described as a challenging geopolitical backdrop. During that period, we saw a rise in protectionism, growing global instability, mounting uncertainty for international commerce, fragile supply chains, tensions between the US and China and the continuing Russian invasion of Ukraine. Trade is no longer simply an economic exercise but increasingly an instrument of geopolitical strategy, as is evidenced, for example, by the recent United States Supreme Court decision on the legality of President Trump’s general tariffs.

In that context, the FTA with India is about not merely securing new market access but providing stability for businesses, diversifying supply chains and establishing a platform for sustaining strategic co-operation with an important partner. We also welcomed in the report the fact that the agreement reached is compliant with World Trade Organization rules, especially in light of the current challenges to the rules-based international order.

I turn to the first of the topics covered: the trade in goods. Here, it is clear that the FTA secures improved access for United Kingdom manufacturers. For exporters, it delivers tariff reductions on 90% of Indian tariff lines, while the UK will eliminate tariffs on 99% of Indian imports. UK consumers can also expect to benefit from improved choice and lower prices. That said, there are shortcomings here, chiefly the pace at which benefits for UK goods exporters will be realised. Under the staging and quota arrangements, India will reduce its barriers to UK exports only gradually, over a period of some 15 years. Meanwhile, some Indian exporters will enjoy immediate access to the UK market. This imbalance reflects the relative openness and otherwise of our two economies, but it makes the FTA a long-term strategic investment in the UK, rather than a quick win. I want to come back to that point later in my remarks.

Some UK industries, notably dairy, may face increased competition in responding to new opportunities for access to India’s markets. We therefore ask the Government to set out what measures they will take to support sectors adversely affected. They should monitor carefully the risks of trade displacements, both of Indian goods diverted from the US as a result of President Trump’s tariffs, but also of exports from developing countries, especially Pakistan and Bangladesh, which could be displaced by increased Indian access to the UK. We highlight in the report the potential risk posed by India’s use of non-tariff barriers, particularly the so-called quality control orders. These could undermine the agreement’s objectives and exacerbate market asymmetries. We therefore conclude that the Government must not hesitate to engage with India directly where barriers remain.

I turn next to services and investment, because another shortcoming there is what was omitted from the agreement. In order to conclude the deal—and we understand this—several important UK priorities were ultimately left out. There is no bilateral investment treaty. There are no arrangements on legal services, a long-standing and unresolved issue between the legal professions in both countries—I draw attention to my declaration of interest in the report and elsewhere. There is no new market access in financial services and no finalised framework for mutual recognition of professional qualifications. These represent missed opportunities and highlight that the agreement is heavily weighted towards goods. There is considerable scope for further work with India on services and investment facilitation and we urge the Government to pursue this. They should treat the agreement as a start and not an end.

I turn to the movement of people. We should be clear that the agreement’s provisions relate to facilitating the temporary movement of professionals, not UK-India migration more broadly. We heard that the provisions create stability for Indian business visitors to the UK but are unlikely to impact UK-India migration patterns significantly.

The agreement was accompanied by a side letter stating that the UK would negotiate a so-called double contributions convention—or DCC—an agreement under which temporary workers would make social security contributions in only one country, rather than in both, for a period of up to three years. We called on the Government to conduct an impact assessment on the consequences of exempting certain temporary Indian workers from UK national insurance contributions. Since then, the DCC has been agreed and laid before the House. That was noted by the International Agreements Committee last week. I therefore draw the House’s attention to a letter sent on 25 February by my successor, the noble Lord, Lord Johnson, to the noble Lord, Lord Stockwood, the Minister, which reiterates the committee’s recommendations for an impact assessment.

Our inquiry and the preparation for our report took place before the conclusion of the EU-India FTA negotiations, so we were unable to analyse the implications of this in any detail in our report. The two agreements appear similar, in certain respects, taking into account the scale of our respective economies. It appears, for example, that India has committed to a similar level of tariff liberalisation for EU cars as it did for the UK, albeit for a much larger annual quota. Overall, the UK may retain an element of first-mover advantage, as the EU-India FTA will not enter into force for some time, but it is unclear how competitive UK products will remain in India, in the long run, as it opens up its market.

Given the important outstanding areas and the point that I have just made, it is vital that the agreement is treated as a living instrument, not a static one. There is clear and mutual benefit in deepening the UK-India relationship beyond the free trade agreement. The Government should make full use of existing dialogue mechanisms and networks to address concrete issues and to build broader co-operation. Given India’s size and significance, and the potential of our bilateral relationship, we believe this should be a high priority.

Moreover, as one witness reminded us, an FTA is not a panacea. The benefits can be realised only if businesses are able to use the agreement effectively. We therefore recommend that the Government introduce a package of measures to help businesses, especially small and medium-sized enterprises, to take full advantage of the opportunities. This should include clear, accessible, sector-specific guidance and an explanation of the enhanced support that will be available through the department, the high commission and its regional offices in India.

Overall, this agreement is a noteworthy achievement. The task now is to make the most of it by addressing its shortcomings, by helping business to use it and by working with India to remove the remaining barriers to trade. There is real mutual benefit in strengthening this relationship further, and we urge the Government to give that objective the priority that it deserves. We also look forward to the Government’s full response to our report in due course and to what the Minister has to say this afternoon. I beg to move.

--- Later in debate ---

[Lord Goldsmith (Lab)]

My Lords, it has been an extraordinary debate. I am privileged to have led it and to have led the International Agreements Committee.

It is a great shame that space and parliamentary time did not allow this debate to take place in the Chamber, because I think many Members of the House would have benefited enormously. They would have enjoyed and appreciated the contributions made today by so many noble Lords, which come from great experience: contributions from former Ministers, such as the noble Lord, Lord Ahmad, and the noble Lord, Lord Johnson, who has been a Minister as well as being the current chairman of the International Agreements Committee; from positions of stewardship of the British Council, like the noble Baroness, Lady Prashar; connections with the country, with the diaspora referred to by the noble Baroness, Lady Gill —the noble Lords, Lord Sahota and Lord Sikka, have extraordinary connections too—or even connections through family, although the noble Lord, Lord Johnson, told us he managed to contrive not to follow the family tradition, by being born somewhere other than India. These connections have led to a richness of experience and, importantly, the knowledge that has gone into this debate.

There are three points on which I want briefly to draw, if I may. The first is what was said by many Members of the Committee in relation to this being the start, not the end, of the journey. I am glad to have heard what the Minister said about the Government recognising that; obviously, people will look at his words carefully, but they will look even more carefully at the action the Government then take. As the noble Baroness, Lady Prashar, said, the real test will be in the implementation and the conclusion of the empty parts—that is, the things that have not been dealt with.

The second point I want to touch on briefly is the comparison with the European Union, which came up from time to time. We noted, as we finished the report, that the EU had reached its agreement and we wanted to know how well we had done compared with it. The Minister has now confirmed to the noble Lord, Lord Fox—I am glad that he pressed the point, as uncharacteristic as it was of him to do so—that we will see the comparison that his department has been performing. Everyone will be pleased to see that.

Surprisingly, I found myself in agreement with the noble Lord, Lord Frost, on something: we both agreed that there was one thing the EU did better than us—namely, the scrutiny that took place. This is one of the reasons why the scrutiny debate that is coming up will be so important: this Parliament has lost areas of scrutiny that we had. As a result—this may have been an unintended consequence, but that is not the point—the scrutiny from which this country used to benefit no longer happens. I hope that, when we come to the debate on 16 March, all noble Lords here today will attend and that we will push back on this issue.

The third point on which I want to touch simply concerns scrutiny and the accountability gap. Having chaired this committee for a number of years and sat through many debates, there are several things here that I hope the Minister will take away. I ask noble Lords to look at the end of this report and the number of witnesses we managed to have. There are two points to make about that. One is that we were fortunate to have the time to do it. Because of the agreements that had been made and the Grimstone commitments, we were able to get into this more deeply—and thank goodness we were, so that we could look at this matter more thoroughly than we would normally be able to do.

When it comes to looking at what the committee’s report said on scrutiny, it is important to consider the amount of work that was done by the very limited staff we had—and have—to get through all of this in that time. I invite the Minister to discuss that point with his colleagues and officials because we do not think that people always understand what goes into this committee’s work. The committee looks at things very seriously, sincerely and hard, but with the benefit of evidence, which we have to collect together at short notice in order to examine a treaty. We believe that this benefits the country. We also believe that it benefits the Government; that has been said in this debate, as well.

It is perfectly true to say—I have said this to Ministers before—that they do not have the opportunity to say to negotiating partners, “We’re very sorry but we can’t do that. Those people in Westminster simply won’t buy it”. That really has to be considered hard by the Government. Having been a Minister myself, I know that one does not like to have one’s work marked by Parliament, to some extent, but it can be helpful as well. I hope that we will come back to that.

I thank noble Lords for their kind remarks about the committee’s work and about me—part of me thinks, like somebody almost said, “They would say that, wouldn’t they?” It has been an extraordinary privilege to chair the committee, but I want to underline the work done by its members and its staff and officials. There are very few of them but they do an extraordinary amount, covering all the different territories, agreements and disciplines, including defence. The committee deals not just with trade agreements—I am sure the Minister will understand that—but trade agreements get the best deal because we have the benefit of the Grimstone arrangements, which do not apply to other treaties such as those on defence, Chagos or Rwanda, which we also dealt with. I hope the Minister will take that away when he comes to consider that debate. At the end of the day, we would not want to find that international agreements—which sometimes affect the citizens of this country even more than the primary legislation we consider—are being treated as a second-class citizen when it comes to parliamentary scrutiny.

I thank all noble Lords for their participation in this debate. I apologise for taking rather longer in this winding up than is usual. I beg to move.

Motion agreed.