The much-discussed India-UK Free Trade Agreement officially came into force today, July 15, throwing open almost the entire British market to Indian exporters. At the same time, it brings down the price of a select basket of British goods for Indian shoppers, which means the deal matters to businesses and everyday buyers on both sides.
Speaking at a press conference in New Delhi just before the rollout, Commerce Secretary Rajesh Agrawal described the pact as a 'gold standard' and a 'first-of-its-kind' trade agreement. The CETA is the sixth free trade agreement implemented by the Modi government, coming after earlier deals with Mauritius, the UAE, Australia, the European Free Trade Association and Oman.
Scotch Whisky Sees the Biggest Cut
Among the British products entering India, Scotch whisky is the clear top gainer. Under the agreement, the import duty on UK whisky drops immediately from 150% to 75%, and it will taper further to 40% over the next ten years. That steady reduction makes the deal especially good news for whisky drinkers.
Other premium spirits get relief too. The category includes cider, mead, sake, brandy, bourbon, rum, gin, vodka, liqueurs and tequila. The standard 150% duty on these falls to 110% in the first year and to 75% by year ten, though the concession applies only above a minimum import price, generally around $5 a litre.
Premium British Cars Within Reach
The deal will also be felt in the luxury car segment. Tariffs on Completely Built Units, currently as high as 110%, will fall to 30% in the first year and to just 10% after five years, under a quota system. The rule covers petrol models of 3,000cc and above and diesel models above 2,500cc.
Luxury names such as Rolls-Royce, Aston Martin, McLaren and Land Rover stand to benefit the most. Jaguar Land Rover India has already begun passing the benefit on to buyers, cutting the ex-showroom price of the Range Rover SV by Rs 75 lakh, from Rs 4.25 crore to Rs 3.5 crore.
What Else Gets Cheaper
Beyond whisky and cars, tariffs will also come down on British chocolates, sweet biscuits, soft drinks, cosmetics and other consumer goods, which could make these items more affordable in India.
To protect domestic producers and farmers, New Delhi has kept several categories out of the tariff concessions. These include dairy products, cereals, millets, pulses, edible oils, oilseeds, fresh apples, walnuts, whey and modified whey, blue-veined cheese, specific seed categories, gold bars and smartphones.
The British Market Opens for Indian Exporters
Under CETA, the UK will eliminate duties on 99% of Indian tariff lines from day one. According to the deal data, this removes tariffs of up to 70% on processed foods, 21.5% on marine products, 18% on engineering goods and auto components, 16% on leather and footwear, 12% on textiles and clothing, and 8% on chemicals and pharmaceuticals.
The textiles and clothing sector will now face zero duty instead of the earlier 12%. That closes a gap which had left Indian exporters at a disadvantage against Bangladesh, Pakistan and Cambodia, all of which already enjoyed duty-free access to the UK. Manufacturing hubs such as Tiruppur, Surat, Ludhiana, Bhadohi and Moradabad are expected to see stronger demand as a result.
A Boost for Pharma and Medical Devices
The pharmaceutical sector also secures zero-duty access. India exports $23.31 billion worth of pharmaceuticals globally, while the UK imports close to $30 billion worth of medicines every year. With the duty gone, Indian generic medicines will become more competitive in Europe, which is India's largest pharma export market.
Medical devices, including surgical instruments, diagnostic equipment, ECG machines and X-ray systems, will also gain duty-free entry.
Leather, Agriculture and Indian Cars
Leather and footwear exporters are in line for major gains as well. The UK imports $8.5 billion worth of leather and footwear, against India's current exports of just $440 million, leaving considerable headroom for growth.
On agriculture and processed food, the UK remains a premium market for Indian tea, mangoes, grapes, spices and processed food. The government expects agricultural and processed food exports to the UK to rise by more than 50% over the next three years, with Maharashtra, Gujarat, Kerala and the northeastern states set to benefit the most.
The UK has also granted concessions on Indian electric, hybrid and hydrogen passenger cars. Britain's normal tariff on passenger cars is 10% under CETA.
