The India–United Kingdom Comprehensive Economic and Trade Agreement (CETA) 2025 marks a significant step in bilateral economic relations, with a dedicated focus on digital trade. Chapter 12 of the pact outlines provisions that aim to expand digital cooperation while balancing regulatory oversight, opening fresh opportunities for businesses but also raising debates around digital sovereignty.
India–UK Digital Agreement
The digital trade chapter recognises electronic signatures and contracts, easing compliance for companies engaged in cross-border business. This is expected to streamline India’s $30 billion software export market by reducing paperwork and cutting transaction costs. Both countries also agreed to maintain zero customs duties on electronic transmissions, reinforcing the free flow of digital goods and services.
Importantly, the pact introduces regulatory sandboxes, encouraging experimentation by data-driven businesses and startups. This is being seen as a strategic move to integrate India more deeply into the global digital economy.
Key Digital Benefits
The agreement facilitates paperless documentation, e-invoicing, and smoother market access for SMEs. Indian IT companies will be able to participate in British public procurement, a sector that offers large opportunities. The inclusion of social security waivers for short-term assignments further reduces costs for employers and employees alike.
While the pact is primarily focused on services, Indian textile exports will also gain from tariff reductions, supporting regional economies. Together, these measures promise to create a more predictable and expansive trade corridor between India and the UK.
Concerns Over Digital Sovereignty
Despite the benefits, concerns remain. Critics argue that India has diluted its regulatory autonomy by restricting routine source-code inspections, allowing access only during investigations or legal proceedings. Although government procurement remains exempt, the limited scope for proactive oversight could hinder India’s ability to safeguard digital governance.
The agreement does include security exceptions to protect critical infrastructure, yet the absence of built-in monitoring mechanisms leaves questions about long-term digital sovereignty.
Strengthening Oversight
Experts suggest that India could mitigate risks by accrediting trusted laboratories to conduct sensitive code reviews under strict safeguards. Mandating audit trails for cross-border data flows would further enhance accountability. The agreement’s voluntary stance on open government data also requires a clearer policy framework to ensure transparency and reuse.
Currently, a formal review of digital trade rules is scheduled in five years. However, many experts recommend a shorter three-year cycle, allowing India and the UK to adapt to rapid technological advances, especially in fields such as artificial intelligence