The India-UK Free Trade Agreement (FTA) marks a strategic deepening of the $60-billion trade relationship between the two countries, with gains for Indian exports of textiles, footwear, carpets and marine products, which currently face 4-16% tariffs in the UK. Similarly, Indian consumers will get to enjoy the benefits of lower duties on Scotch whisky and British cars. However, there is still some time for your coveted Range Rover to get a duty cut. ET's Kirtika Suneja explains measures the government has taken to protect domestic industries...
When will the two countries be able to reap the benefits announced in the FTA?
The text of the FTA will take some more time to be finalised. Once ready, it would undergo 'legal scrubbing' or vetting by lawyers from both sides before the signing. This process may take about three months. After that, the UK parliament is expected to take another year to ratify the pact for its implementation.
How has India protected its domestic auto industry?
Tariffs on automotive imports from the UK will be reduced to 10% from over 100% under quotas. However, the volume of imports will be very small and duty on cars will be cut over a period of 10-15 years. New Delhi has not allowed low-cost cars, neither has it given an out-of-quota duty reduction for electric vehicles. Moreover, there will be further differentiation in tariffs based on the price bands and engine capacity.
Is there a concern that low-duty on whisky could lead to a surge in imports?
India's decision to cut tariffs on imports of Scotch whisky from the UK to 75% immediately from 150% now, and to 40% after ten years, would only lead to an incremental increase in imports and not significantly affect the domestic market. Though domestic industry had sought a Minimum Import Price provision on Scotch whisky to avoid dumping and under-invoicing by foreign companies, negotiators insist that Scotch is only 2.5% of the Indian whisky market and there is no scope for a huge increase in exports from the UK as it is a geographical indication product, which is produced in small quantities.
Which products are outside the ambit of the FTA?
In order to safeguard the interest of farmers, India has excluded sensitive agricultural products such as dairy items, apples, cheese, oats, animals and vegetable oils where no duty benefits provided by India to the UK. Similarly, New Delhi will also not give any duty concessions to sensitive industrial goods like plastics, diamond, silver, base stations, smartphones and optical fibres.
( Originally published on May 09, 2025 )
When will the two countries be able to reap the benefits announced in the FTA?
The text of the FTA will take some more time to be finalised. Once ready, it would undergo 'legal scrubbing' or vetting by lawyers from both sides before the signing. This process may take about three months. After that, the UK parliament is expected to take another year to ratify the pact for its implementation.
How has India protected its domestic auto industry?
Tariffs on automotive imports from the UK will be reduced to 10% from over 100% under quotas. However, the volume of imports will be very small and duty on cars will be cut over a period of 10-15 years. New Delhi has not allowed low-cost cars, neither has it given an out-of-quota duty reduction for electric vehicles. Moreover, there will be further differentiation in tariffs based on the price bands and engine capacity.
Is there a concern that low-duty on whisky could lead to a surge in imports?
India's decision to cut tariffs on imports of Scotch whisky from the UK to 75% immediately from 150% now, and to 40% after ten years, would only lead to an incremental increase in imports and not significantly affect the domestic market. Though domestic industry had sought a Minimum Import Price provision on Scotch whisky to avoid dumping and under-invoicing by foreign companies, negotiators insist that Scotch is only 2.5% of the Indian whisky market and there is no scope for a huge increase in exports from the UK as it is a geographical indication product, which is produced in small quantities.
Which products are outside the ambit of the FTA?
In order to safeguard the interest of farmers, India has excluded sensitive agricultural products such as dairy items, apples, cheese, oats, animals and vegetable oils where no duty benefits provided by India to the UK. Similarly, New Delhi will also not give any duty concessions to sensitive industrial goods like plastics, diamond, silver, base stations, smartphones and optical fibres.
( Originally published on May 09, 2025 )
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