📅 May 6, 2025, Post 1: Carbon, Commerce, and Clash: India–UK FTA Hits a Climate Hurdle | Mains Essay Attached | Target IAS-26 MCQs Attached: A complete Package, Dear Aspirants!
Carbon, Commerce, and Clash: India–UK FTA Hits a Climate Hurdle
INTERNATIONAL HERO — PETAL 006
🗓️ May 6, 2025
Thematic Focus: International Trade 🌐 | Climate Diplomacy ♻️ | India–UK Relations 🇮🇳🇬🇧
💼 Opening Whisper
When trade meets temperature, and exports meet emissions, treaties become more than numbers — they become mirrors of justice.
Key Highlights
• The ongoing India–UK Free Trade Agreement (FTA) negotiations, launched in 2022, have hit fresh hurdles due to the UK’s proposed Carbon Border Adjustment Mechanism (CBAM) — an import-based carbon tax set to be effective from January 1, 2027.
• As of FY 2023–24, bilateral trade reached $21.34 billion, up from $20.36 billion the previous year. Indian exports to the UK currently face an average tariff of 4.2%.
• The negotiations also aim to finalize:
🔹 A Bilateral Investment Treaty (BIT)
🔹 A Double Contribution Convention Agreement (DCAA) on social security
🔹 Provisions for MSMEs and digital trade
🤝 Key Demands & Frictions
India’s Key Demands:
• Greater market access in labour-intensive sectors — textiles, gems, jewellery
• Visa liberalisation for Indian professionals (IT, healthcare, ITeS)
• Special treatment for MSMEs and flexibility in carbon emission standards
UK’s Key Demands:
• Lower Indian tariffs on Scotch whisky, EVs, chocolates, lamb meat
• Access to telecom, insurance, financial, and legal services
• A sunset clause in BIT and concessions on data localisation and carbon tax rules
🌫️ Carbon Border Adjustment Mechanism (CBAM): The Crux
• CBAM is a proposed environmental tariff on imports with high carbon footprints (e.g., cement, steel, aluminium, fertilisers, hydrogen)
• Purpose: To level the playing field between domestic UK producers (bound by climate regulations) and foreign exporters with less stringent carbon laws
• Indian Concern: CBAM violates the CBDR principle of climate justice and places disproportionate burden on developing economies
🇮🇳 India’s Strategic Response
• India has proposed a “Rebalancing Mechanism”: the UK must compensate Indian exporters affected by CBAM
• Highlighted India’s Carbon Credit Trading Scheme (CCTS) — based on emission intensity, which suits developing economies better than absolute emission caps
• India maintains that CBAM is a non-tariff barrier and must not be allowed to erode FTA benefits
🛣️ Way Forward
• India must ensure:
🔹 Inclusion of climate safeguard clauses in the final FTA
🔹 Robust dispute resolution mechanisms
🔹 Continued emphasis on CBDR and equity in global climate policy
• Strategic balance between climate commitments and trade competitiveness is crucial, especially with similar EU and G7 mechanisms in the pipeline.
🧭 GS Paper Mapping
• GS Paper 2 – International Relations / Agreements
🔹 India–UK Bilateral Engagement
🔹 Carbon Diplomacy and CBAM’s WTO compatibility
• GS Paper 3 – Environment & Trade
🔹 CBDR, Carbon Credits, Non-Tariff Barriers
🔹 Climate-linked Trade Policy Challenges
💭 A Thought Spark — by IAS Monk
Trade agreements are written in ink, but carbon makes them bleed through the margins. Between tariffs and temperatures lies the real negotiation — of fairness, survival, and the future.
High Quality Mains Essay For Practice :
Word Limit 1000-1200
India–UK Diplomatic Relations Since the Independence Act: A Journey from Empire to Equal Partnership
Introduction: From Coloniser to Collaborator
The relationship between India and the United Kingdom is one of the most layered and historically profound bilateral partnerships in the world. Emerging from the shadows of colonial subjugation, India’s diplomatic journey with the UK formally began with the Indian Independence Act of 1947 — a law passed by the British Parliament to grant India and Pakistan their sovereign status.
What followed was a story of evolution: from early post-colonial tensions to a modern-day multifaceted engagement involving trade, diaspora, education, defence, and shared global visions. India-UK relations today are no longer defined by the legacy of the Empire, but by mutual respect, democratic values, and evolving strategic convergences in a multipolar world.
I. The Foundational Moment: The Indian Independence Act, 1947
The Indian Independence Act marked a legal and diplomatic milestone — it ended British colonial rule, granted dominion status to India and Pakistan, and allowed them to frame their own Constitutions.
Though the Act symbolised legal sovereignty, the real test began after 1947 — as newly independent India sought to define its own foreign policy, one that was principled and free from its colonial past. UK, on the other hand, had to reconcile with the loss of its “jewel in the crown” while navigating a decolonising Commonwealth.
In 1947 itself, India established its High Commission in London, and the UK reciprocated in New Delhi. This diplomatic foundation enabled early exchanges in governance, development, and international forums like the United Nations and the Commonwealth.
II. Early Decades (1947–1990): From Political Caution to Institutional Ties
🌐 India’s Non-Alignment and Nehru’s Independent Diplomacy
India under Nehru was firm in asserting strategic autonomy. While the UK aligned with the Western bloc during the Cold War, India chose non-alignment, creating occasional diplomatic friction.
UK’s closeness to Pakistan, especially in defence dealings and over Kashmir, often created suspicion in India’s strategic circles. Despite this, cultural and educational links remained robust, with thousands of Indian students studying in British universities, and bilateral visits keeping communication channels open.
🏛️ The Commonwealth Link
India’s continued membership of the Commonwealth, even as a republic from 1950, was symbolic. It showed India’s willingness to engage with former colonial powers, but on equal footing.
🏗️ Aid and Development Partnerships
The UK was one of India’s early bilateral aid partners, supporting sectors like health, education, and rural development. DFID (now part of FCDO) was instrumental in numerous community programs across India.
III. The New Millennium (1991–2010): Economics, Diaspora, and Strategic Maturity
💱 Post-Liberalisation Economic Engagement
India’s 1991 economic reforms opened the door to global capital, and the UK — with its large Indian diaspora and financial institutions — became a major investor.
- UK emerged as one of the top G20 investors in India
- Indian firms like Tata, Infosys, and Wipro expanded aggressively in the UK
- London became a key hub for Indian bonds, mergers, and banking
🌍 The Indian Diaspora as a Soft Power Bridge
The over 1.6 million-strong Indian-origin community in the UK played a vital role in deepening ties:
- The first Indian-origin MP in the UK Parliament was elected in 1992
- Today, British Prime Minister Rishi Sunak himself is of Indian origin
This diaspora emerged as economic contributors, political influencers, and cultural ambassadors, symbolising the intertwined destinies of the two nations.
IV. Strategic Turn (2010–Present): Defence, Indo-Pacific, and Trade Talks
🔰 Defence and Security Cooperation
India and the UK have engaged in regular naval exercises (e.g., Konkan series) and discussions on joint defence production, cyber security, and maritime domain awareness.
Post-Brexit, the UK’s Integrated Review identified India as a key Indo-Pacific partner, marking a pivot toward Asia.
📜 Comprehensive Strategic Partnership (2021)
In 2021, both countries launched the ‘2030 Roadmap for India-UK Relations’, which covers:
- Bilateral trade and investments
- Climate and clean energy
- Defence and cyber cooperation
- Health and vaccine diplomacy
🤝 Free Trade Agreement (FTA) Negotiations
Initiated in 2022, the India-UK FTA negotiations have seen over 14 rounds of dialogue. Despite promising trade volumes (~$21 billion in 2024), hurdles like carbon taxes (CBAM), visa liberalisation, and tariff concessions on whisky and automobiles remain.
Still, the FTA reflects a shift from aid to partnership-driven engagement, based on reciprocity and strategic alignment.
V. Challenges and Critiques
Despite progress, certain irritants continue to affect ties:
- Colonial Memory & Apologies:
– India still awaits a formal apology for the Jallianwala Bagh massacre and colonial plunder.
– Debates around repatriation of stolen artefacts (like the Koh-i-Noor) continue. - Kashmir and Diaspora Politics:
– UK’s Parliament occasionally debates Kashmir, triggering diplomatic responses from India.
– Diaspora protests in London sometimes strain relations. - Immigration and Visa Issues:
– Despite demand from Indian professionals, stringent visa regimes remain a sticking point. - Carbon Border Tax (CBAM):
– India opposes UK’s proposed carbon import tariffs, citing climate injustice.
VI. What Lies Ahead: Equal Partnership in a Multipolar World
The future of India-UK relations rests on mutual recalibration:
- Move from symbolism to substance in diplomacy
- Prioritise climate justice and technology transfer
- Use the diaspora as a development partner, not just a cultural bridge
- Finalise the FTA to elevate economic ties
- Collaborate in Indo-Pacific, Africa, and G20 platforms
Both nations — former colony and coloniser — now stand on equal democratic ground, bound by shared values: rule of law, pluralism, and parliamentary democracy.
Conclusion: A Journey of Realignment, Not Reconciliation Alone
India–UK relations began as an unequal affair — one sovereign reclaiming space from another. But over the decades, they have grown into a diplomatic story of maturity, modernity, and mutuality. Today, they walk as partners — each with its own strengths, sensitivities, and visions for the future.
In the long arc of history, this partnership is not about forgetting the past, but about forging the future — with open trade, open minds, and an open heart.
Quote to End With
“We are not what history made us — we are what we make of history now.” — IAS Monk
Target IAS-26: Daily MCQs :
📌 Prelims Practice MCQs
Topic:
MCQ 1 – Type 1: How many of the following statements are correct?
Q. Consider the following statements about the India–UK Free Trade Agreement (FTA) negotiations:
• 1) India is seeking greater market access for its textiles, gems, and jewellery sectors.
• 2) The UK has proposed a Carbon Border Adjustment Mechanism (CBAM) to impose levies on low-emission imports.
• 3) The FTA also includes negotiations on a Bilateral Investment Treaty and a social security agreement.
• 4) The UK is seeking tariff reduction on Indian exports of steel, aluminium, and cement.
Options:
A) Only two
B) Only three
C) All four
D) Only one
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation
✅ Correct Answer: B) Only three
🧠 Explanation:
• 1) ✅ Correct – India has demanded improved access for its labour-intensive exports like textiles, garments, gems, and jewellery.
• 2) ❌ Incorrect – The CBAM is designed to tax high-emission imports, not low-emission ones. It’s an environmental measure targeting goods like steel, aluminium, cement, etc.
• 3) ✅ Correct – Along with the FTA, India and the UK are also negotiating a Bilateral Investment Treaty (BIT) and the Double Contribution Convention Agreement (DCAA) on social security.
• 4) ✅ Incorrect – The UK is seeking lower Indian tariffs on its own high-value exports like Scotch whisky, EVs, chocolates, not Indian exports.
✅ So, only statements 1, 2 (false), and 3 are correct. Hence, three statements are correct.
MCQ 2 – Type 2: Two-Statement Based
Q. Consider the following statements about India’s response to the UK’s CBAM:
• 1) India has proposed a Rebalancing Mechanism requiring the UK to compensate affected Indian industries.
• 2) India has argued that its Carbon Credit Trading Scheme (CCTS) uses absolute emission caps similar to the UK’s carbon pricing system.
Which of the above statements is/are correct?
A) Only 1 is correct
B) Only 2 is correct
C) Both are correct
D) Neither is correct
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation
✅ Correct Answer: A) Only 1 is correct
🧠 Explanation:
• 1) ✅ Correct – India proposed a Rebalancing Mechanism to compensate exporters affected by CBAM.
• 2) ❌ Incorrect – India’s CCTS is based on emission intensity, not absolute emission caps, which it argues is more appropriate for a developing country.
✅ Hence, only Statement 1 is correct.
MCQ 3 – Type 3: Which of the following statements is/are correct?
Q. Which of the following are among the UK’s key demands in the India–UK FTA negotiations?
• 1) Tariff reduction on Scotch whisky and electric vehicles
• 2) Market access in telecom and legal services
• 3) Stronger recognition of Indian data localisation laws
• 4) Inclusion of a sunset clause in the Bilateral Investment Treaty
Options:
A) 1, 2, and 4 only
B) 1 and 3 only
C) 2, 3, and 4 only
D) All four
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation
✅ Correct Answer: A) 1, 2, and 4 only
🧠 Explanation:
• 1) ✅ Correct – UK seeks tariff cuts on Scotch whisky, EVs, and luxury items.
• 2) ✅ Correct – UK wants market access in legal, insurance, and telecom sectors.
• 3) ❌ Incorrect – UK is actually opposing India’s data localisation policies, not supporting them.
• 4) ✅ Correct – UK is pushing for a sunset clause in the proposed Bilateral Investment Treaty.
✅ Hence, 1, 2, and 4 are correct.
MCQ 4 – Type 4: Direct Fact
Q. What is the intended purpose of the Carbon Border Adjustment Mechanism (CBAM)?
A) To subsidise developing countries for adopting green technologies
B) To equalise carbon pricing between domestic and imported high-emission goods
C) To cap global carbon emissions at pre-1990 levels
D) To provide tax holidays for low-emission exporters
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
✅ Correct Answer: B) To equalise carbon pricing between domestic and imported high-emission goods
🧠 Explanation:
•• The CBAM is designed to prevent carbon leakage and ensure that foreign producers do not gain unfair advantage over domestic industries complying with strict emission norms.
✅ It essentially imposes a tax on carbon-intensive imports to maintain parity in carbon costs.
