The India-UK Comprehensive Economic and Trade Agreement (CETA), which entered into force on July 15, cuts tariffs, expands market access for services and eases mobility for Indian professionals. Yet its digital trade chapter is comparatively modest in scope.

Around the same time, the Association of Southeast Asian Nations (ASEAN) concluded negotiations for its Digital Economy Framework Agreement (DEFA), a regional accord that goes much further in setting rules for the digital economy. The comparison is imperfect. ASEAN is an integrated regional market, whereas the India-UK agreement spans two distinct regulatory systems. Even so, DEFA may offer a useful reference point for India’s future digital trade agreements.

What India and the UK agreed

Chapter 12 of CETA establishes the basic foundations of digital trade, including paperless trading, legal recognition of electronic contracts and protection against mandatory disclosure of software source code. What it does not do is address the issues that increasingly define digital trade. It contains no binding commitments on cross-border data flows, no prohibition on data localisation requirements and no arrangement preventing tariffs on digitally-delivered products such as software downloads or streaming services. This cautious approach reflects not only India’s long-standing preference for policy flexibility over data governance, but also its desire to preserve industrial-policy flexibility as more goods and services become digitally deliverable.

India’s broader legal framework is more open than is often assumed. The Digital Personal Data Protection (DPDP) Act, 2023 adopts a ‘blacklist’ approach: personal data can be transferred to any country unless the government specifically restricts that destination. As of 2026, no such restrictions have been notified, making cross-border transfers broadly permissible under Indian law.

The UK’s legal framework also limits what could realistically have been agreed. Under the British data protection law, unrestricted transfers require either an adequacy decision—a status India has not received yet—or alternative legal safeguards. The absence of stronger commitments, therefore, reflects constraints on both sides rather than India’s reluctance alone.

Even so, the pact leaves room for future progress. Its ‘forward review’ mechanism offers a path for the UK to benefit from any stronger commitments on cross-border data flows or data localisation that India grants to future trading partners.

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