India-UK FTA Explained: Cheaper Scotch, Premium Cars; Check Full List Of Products Getting Cheaper

The UK-India Free Trade Agreement came into effect today, July 15 opening nearly all of the British market to Indian exports. It also makes a select basket of UK goods cheaper for Indian consumers.

Commerce Secretary Rajesh Agrawal, addressing a press conference in New Delhi before the rollout called it a 'gold standard' and 'first-of-its-kind' of trade agreement.

The CETA is the sixth FTA implemented by the Modi government, following pacts with Mauritius, the UAE, Australia, the European Free Trade Association, and Oman.

What gets cheaper in India After UK-India FTA

Scotch whisky is the top gainer among British products that are entering India. Import duty on UK whisky drops immediately from 150% to 75% and will taper further to 40% over the next ten years as per the agreement.

The other category of premium spirits, including cider, mead, sake, brandy, bourbon, rum, gin, vodka, liqueurs, and tequila, also gets relief since the standard 150% duty falls to 110% in year one and 75%by year ten, though the concession is only applicable above a minimum import price, generally around $5 a litre.

Premium British cars will also become more affordable after the tariffs on Completely Built Units, currently as high as 110%, will fall to 30%in the first year and to 10% after five years, under a quota system. The rule applies to 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 are going to benefit most.

Jaguar Land Rover India has already passed on this benefit by cutting the ex-showroom price of the Range Rover SV by Rs 75 lakh, from Rs 4.25 crore to Rs 3.5 crore.

Apart From whisky and cars, British chocolates, sweet biscuits, soft drinks, cosmetics, and other consumer goods will also see tariffs come down.

However, New Delhi has excluded some domestic categories from tariff concessions which includes 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.

India gains Big in the UK market

Under CETA, the UK will eliminate duties on 99% of Indian tariff lines from day one, removing 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 as per the deal data.

The textiles and clothing sector will face zero duty from the earlier 12% closing a gap that had put Indian exporters at a disadvantage against Bangladesh, Pakistan, and Cambodia, which already enjoyed duty-free access to the UK. Manufacturing hubs including Tiruppur, Surat, Ludhiana, Bhadohi, and Moradabad are expected to see higher demand as a result.

The pharmaceutical sector also gains zero-duty access as well. India exports $23.31 billion worth of pharmaceuticals globally, while the UK imports close to $30 billion worth of medicines annually.

After the removal of duty from the pharma goods, Indian generics medicines will become more competitive in Europe which is India's largest pharma export market.

Additionally Medical devices such as surgical instruments, diagnostic equipment, ECG machines, and X-ray systems also gain duty-free entry.

Leather and footwear exporters are getting similar benefits from the UK India FTA. The UK imports $8.5 billion worth of leather and footwear, against India's current exports of just $440 million, This leaves a considerable headroom for growth.

On agriculture and processed food, the UK is still 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 to benefit 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.