India will reduce its average tariff on products from the United Kingdom to 3 percent from 15 percent through the free trade agreement (FTA) the two countries will sign on July 24, the British government said.
The agreement would be signed as Prime Minister Narendra Modi, who is on a two-day visit to the UK, meets his British counterpart Keir Starmer.
The deal will increase UK’s exports to India by nearly 60 percent in the long run, equivalent to an additional £15.7 billion when applied to projections of future trade in 2040.
Bilateral trade between India and the UK is expected to increase nearly 39 percent in the long run to £25.5 billion a year, when compared to 2040 projected levels in the absence of an agreement, the British government added.
India will eliminate tariffs on aerospace goods from as high as 11 percent, while duties on electrical machinery will be either lowered or eliminated from up to 22 percent, the British government said.
India will also either eliminate or halve tariffs on a range of medical devices, between 8.25 percent to 13.75 percent, within ten years.
Whisky producers will benefit from halving of tariffs, to be reduced immediately from 150 percent to 75 percent and then dropped further to 40 percent over the next 10 years, it said. Duties on automobiles would be lowered to 10 percent gradually under a quota from 110 percent before.
“The UK already imports £11 billion in goods from India, but liberalised tariffs on Indian goods will make it easier and cheaper to buy their best products. For businesses, this could mean potential savings when importing components and materials used in areas such as advanced manufacturing or luxury and consumer goods,” the British government said in a statement.
Indian exports are also set to benefit from duty elimination on about 99 percent of the tariff lines, covering almost 100 percent of the trade value, especially aiding labour-intensive shipments of textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery.
India has been able to exclude sensitive items such as dairy products, apples and cheese from the FTA with the UK.
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