Only 24.5% of UK's export value will get immediate duty-free market access to India via FTA

India-UK FTA

The government on Friday said that only 24.5 percent of the UK's export value under the Free Trade Agreement (FTA) will enjoy immediate duty-free access to the Indian market.

India has opened 89.5-percent of its tariff lines, covering 91-percent of the UK’s exports.

On the other hand, all zero-duty concessions granted to Indian exports will be in effect from day one of the agreement with the UK, the commerce ministry said on July 25.

India has got 100-percent duty-free market access for its exports to the UK, covering 99-percent of British tariff lines.

Presently, 48.2 percent of India’s export value (47.3 percent of tariff-lines) enters the UK at zero duty under the most favoured nation regime.

India’s major exports from labour-intensive sectors like textiles, gems & jewellery, leather and footwear, organic chemical, artisanal products and ceramics to high-value goods like auto parts, machinery, pharmaceuticals, and processed foods have been offered zero-duty access to the UK.

The UK will also eliminate tariffs for nearly all Indian agri-exports, with just a few exceptions like pork, chicken, eggs, rice, and sugar.

India and the United Kingdom signed a Comprehensive Economic and Trade Agreement (CETA) on July 24 in London.

Commerce Secretary Sunil Barthwal said that talks are ongoing with the European Union and the United States over FTAs.

He said that tariff concessions have been provided by India over periods of 5,7 or even 10 years for strategically important sectors, especially those under the production-linked schemes (PLI).

The secretary also mentioned that India has secured market access to the tune of four times of its concessions given to the UK on electric vehicles (EVs).

When it comes to labour-intensive sectors, India expects, zero-duty access on leather and footwear products to the UK will make Indian exports price-competitive compared to major suppliers like China, Vietnam, Cambodia, Bangladesh, Indonesia, and several other countries, according to commerce ministry.

The ministry's estimate suggests that exports of leather and footwear to the UK are expected to double in the next two to three years to $1 billion.

On gems & jewellery exports, the ministry sees shipments to the UK surge $2.5 billion within next three years. Presently India ships more than $12 billion of jewellery globally.

India is expected to gain an edge over its competitors like China, Thailand, Hong Kong, UAE and US that are facing tariff between 1-4 percent when it comes to gems & jewellery exports to the UK.

A 30–45-percent increase in Indian textile exports to the UK by 2030, translating into an additional $500–800 million in value is also expected due to zero-duty access under the agreement with UK. It may also give India competitive edge over China, Bangladesh, Vietnam, and Cambodia.