Luxury cars, cosmetics likely to get cheaper

New Delhi: India and the UK on Thursday inked a landmark free trade agreement (FTA) that will cut tariffs on British whisky, cars and an array of items, besides boosting bilateral trade by around USD 34 billion annually.

The deal was signed by Commerce Minister Piyush Goyal and his British counterpart Jonathan Reynold in the presence of Prime Minister Narendra Modi and his British counterpart Keir Starmer.

The following are the highlights of the India–UK Free Trade Agreement (FTA), officially titled the Comprehensive Economic and Trade Agreement (CETA):

Agriculture:

• India to get duty-free access for several agricultural goods in the UK, such as fruits, vegetables, cereals, turmeric, pepper, cardamom, and processed items like ready-to-eat food, mango pulp, pickles, and pulses.
• Over 95 percent of agricultural and processed food tariff lines will attract zero duty.
• Duty-free access is expected to boost agri exports by over 20 percent in the next three years, contributing to India’s goal of USD 100 billion agri-exports by 2030.
• Technical Barriers to Trade (TBT) provisions will streamline certification, reducing time and cost for exporters.
• The FTA opens new markets for emerging products such as jackfruit, millets, and organic herbs, helping farmers diversify.
• India’s fisheries sector will gain access to the UK’s USD 5.4 billion marine import market.
• India is not providing tariff concessions on sensitive sectors: dairy products, apples and oats, and edible oils.

Marine Products:

• UK tariffs eliminated on Indian marine products.
• India’s share in the UK’s USD 5.4 billion marine market is only 2.25 percent, indicating untapped potential.
• UK tariffs on Indian shrimp (4.2 percent to 8.5 percent) will now be duty-free—along with tuna, fishmeal, and feeds.
• Sanitary and Phytosanitary (SPS) measures under the FTA will help Indian exporters meet UK standards, reducing rejections.

Plantation Sector:

• Duty-free access to instant coffee will boost competition with European suppliers like Germany, Spain, and the Netherlands.
• Provides a springboard for value-added coffee products, especially Indian instant coffee.

Oilseeds:

• Reduced tariffs and streamlined procedures will make Indian oilseed exporters more competitive in the UK market.

Textiles:

• Zero-duty access for 1,143 textile and clothing tariff lines.
• India removes its duty disadvantage compared to Bangladesh, Pakistan, and Cambodia.
• UK’s total textile imports: USD 26.95 billion; India’s global exports: USD 36.71 billion; but India’s export to the UK: only USD 1.79 billion.
• High growth expected in ready-made garments (RMG), home textiles, carpets, and handicrafts.
• India likely to gain at least 5 percent additional UK market share in 1–2 years.

Engineering:

• Multiple goods to receive zero-duty access.
• UK is India’s 6th largest engineering export market.
• Despite UK’s USD 193.52 billion engineering imports, India exports only USD 4.28 billion, signalling room for expansion.
• With tariff elimination (up to 18 percent), exports could double to USD 7.5 billion by 2029–30.
• Strong growth forecast for electric machinery, auto parts, industrial equipment, and construction machinery at 12.2 percent CAGR.

Pharmaceuticals:

• India’s global pharma exports: USD 23.31 billion; UK imports: USD 30 billion; Indian share: under USD 1 billion.
• Indian generics to benefit from zero-tariff access, enhancing competitiveness.
• Medical devices such as surgical instruments, diagnostic equipment, ECG and X-ray machines to become duty-free, boosting domestic competitiveness.

Chemicals:

• The FTA is expected to trigger a 30–40 percent surge in chemical exports, reaching USD 650–750 million by 2025–26.
• India exports USD 40.52 billion globally in chemicals; UK imports USD 35.11 billion, but only USD 843 million from India—highlighting export potential.

Plastics:

• Duty-free access for Indian products like films, sheets, pipes, packaging, tableware, and kitchenware.
• Enhanced competitiveness against top suppliers Germany, China, US, Netherlands, Belgium, and France.
• 15 percent projected growth; five-year export target: USD 186.97 million.

Sports Goods and Toys:

• Soccer balls, cricket gear, rugby balls, and non-electronic toys set to benefit from tariff elimination.
• Indian exports will become more price-competitive compared to China and Vietnam, which lack similar FTAs with the UK.

Gems and Jewellery:

• India’s current exports: USD 941 million, including USD 400 million in jewellery.
• UK’s jewellery import market: USD 3 billion.
• Tariff relaxations projected to double exports in 2–3 years.

Leather:

• Tariffs were reduced from 16 percent to zero on leather and footwear.
• Expected to boost exports to over USD 900 million.
• India likely to gain 5 percent market share in 1–2 years.
• Major benefit for MSMEs in Agra, Kanpur, Kolhapur, and Chennai, with GI protection and simplified standards.

Other Key Highlights:

• 99% of tariff lines eliminated, covering nearly 100% of trade value.
• Duties reduced to zero on:
• Marine products (previously up to 20%)
• Textiles and clothing (up to 12%)
• Chemicals (up to 8%)
• Base metals (up to 10%)
• In processed food, 99.7% of lines go from as high as 70% to zero.
• Duty-free access for labour-intensive sectors, processed foods, and high-tariff goods.
• India to receive duty-free access in sectors including marine, base metals, chemicals, instruments/clocks, minerals, plastic, rubber, textile, transport/auto, tea, coffee, and spices.
• UK to benefit from India’s tariff cuts on:
• Aerospace (11% to zero)
• Automotives (up to 110% down to 10% under a quota)
• Electrical machinery (up to 22% down to zero or 50% cut)

Services Sector:

• FTA facilitates mobility for Indian professionals:
• Contractual service suppliers (for specific UK projects)
• Independent professionals like yoga instructors, classical musicians, and chefs

Innovation Chapter (First of its kind):

• Encourages innovative processes and product development.
• Provisions for joint initiatives in emerging and transformative technologies, fostering a dynamic innovation ecosystem.

(With inputs from PTI)