Reduction of Tariffs on British Products in India: Duty Rates to Decrease from 15% to 3% under New Trade Agreement
The India-UK Free Trade Agreement (FTA), successfully concluded on May 6, promises to significantly deepen bilateral trade and investment between the two countries, benefiting multiple key sectors and creating thousands of jobs in the UK.
The FTA aims to eliminate or reduce tariffs on imports and exports between the two nations, offering huge opportunities for increase in the bilateral trade, covering almost 100% of the trade value. Commerce and Industry Minister Piyush Goyal is in London for the trade deal signing ceremony.
The agreement is expected to boost key sectors such as agriculture, processed foods, textiles, footwear, seafood/marine products, gems and jewellery, engineering, pharmaceuticals, chemicals, plastics, leather, electronics, and auto components.
In the agriculture and processed foods sector, over 95% of tariff lines for agricultural products such as fruits, vegetables, pulses, spices, and organic herbs will have zero duty, boosting rural economy and potentially increasing agri-exports by 20% within 3 years. Processed foods tariffs will drop from 70% to zero, improving competitiveness.
India's marine products sector, currently with a 2.25% share of UK marine imports, is forecasted to significantly boost with the removal of tariffs on shrimp, tuna, fishmeal, and other marine products.
Duty-free access on 1,143 product categories including ready-made garments and handicrafts in the textiles and apparel sector will enhance competitiveness, potentially gaining an additional 5% of the UK market, leveling the playing field with Bangladesh and Cambodia.
The pharmaceutical sector, with considerable growth potential, will see zero tariffs on generics and medical devices like surgical instruments and diagnostic equipment, strengthening India’s presence in this market.
In the chemicals and plastics sector, India's exports are expected to grow by 30-40%, reaching $650-750 million in 2025-26. Duty-free access in plastics will help India compete against other major import sources and target a 15% growth over five years.
The engineering, gems and jewellery, leather, and electronics sectors will also benefit from tariff reductions and improved market access, bolstering exports and competitiveness.
The automobile sector will see British luxury vehicles entering India facing lower tariffs under a quota system, while Indian professionals in services sectors will enjoy easier access to the UK.
The FTA is expected to substantially boost bilateral trade and investment by eliminating tariffs on key exports and enabling smoother services trade and government procurement access. It supports India's flagship programs like "Make in India" and "Vocal for Local" by driving job creation and empowering local industries.
Sectors protected include sensitive items like dairy, oats, apples, and edible oils to safeguard domestic producers while maximizing market opportunities for other agricultural and industrial products.
The deal is anticipated to enhance India's export competitiveness in the UK market, unlock major growth potential in pharma and chemicals, and increase overall trade volumes, reinforcing strategic economic ties.
The clean energy industry will have new, unprecedented access to India's vast procurement market as India transitions to renewable energy. The reduction in tariffs and regulatory barriers could increase UK exports to India by nearly 60% in the long run.
British companies selling products to India, including soft drinks, cosmetics, cars, medical devices, and British whisky, will find it easier to sell to the Indian market. Cheaper prices and more choice on clothes, shoes, and food products are expected for British consumers.
The UK will welcome nearly Euro 6 billion in new investment and export wins, which will create over 2,200 British jobs. British workers could enjoy a collective uplift in wages of Euro 2.2 billion each year.
Airbus and Rolls-Royce will deliver aircraft worth around Euro 5 billion to major Indian airlines. The India-UK FTA is expected to increase bilateral trade by nearly 39% in the long run, creating a brighter future for both nations.
[1] Source: Ministry of Commerce and Industry, Government of India [2] Source: Department for International Trade, Government of the UK [3] Source: Confederation of Indian Industry (CII) [4] Source: UK India Business Council (UKIBC)
The FTA's aim to eliminate tariffs on imports and exports opens avenues for a surge in bilateral trade, with a potential increase in agri-exports by 20% within three years due to reduced tariffs on agricultural products. The agreement is anticipated to boost wages for British workers, with an estimated collective uplift of €2.2 billion each year.
Sectors such as engineering, technology, and electronics can expect bolstered exports and increased competitiveness following tariff reductions and improved market access, while the clean energy sector will benefit from unprecedented access to India's vast procurement market, potentially unlocking 60% more UK exports to India in the long run.
