India scores big in UK trade deal: Duty-free boost for agri exports, pharma, textiles, sports

The following are the highlights of the India-UK free trade agreement signed on Thursday.

It is officially called CETA (Comprehensive Economic and Trade Agreement).

Agriculture:

India to get duty-free access in several agri goods in the UK, such as fruits, vegetables, cereals, turmeric, pepper, cardamom and processed goods like ready-to-eat food, mango pulp, pickles and pulses.

Over 95 per cent of agricultural and processed food tariff lines will attract zero duty.

Duty-free access is expected to boost agri exports by over 20 per cent in the next three years, contributing to India’s goal of $100 billion agri-exports by 2030.

Provisions related to Technical Barriers to Trade (TBT) will streamline certification, cutting down time and cost for exporters.

The FTA creates new market access for emerging products, such as jackfruit, millets, and organic herbs, helping farmers diversify against domestic price volatility.

India’s fisheries sector will see expansion through access to the UK’s $5.4 billion marine import market.

India is not giving any tariff concessions on sensitive sectors — dairy products, apples and oats, and edible oils.

Marine:

The CETA eliminates UK tariffs on India’s marine products.

Despite the UK’s $5.4 billion marine import market, India’s share remains at just 2.25 per cent, underscoring a significant untapped opportunity.

With existing UK tariffs on Indian shrimp ranging between 4.2 per cent and 8.5 per cent, the FTA’s tariff elimination is expected to unlock rapid growth, particularly in shrimp, tuna, fishmeal and feeds.

Shrimp, tuna, fishmeal, and feeds, currently taxed between 4.2 per cent and 8.5 per cent, will become completely duty-free.

The FTA’s Sanitary and Phytosanitary (SPS) measures help Indian exporters meet UK standards with ease, reducing rejections and strengthening trust.

Plantation sector:

Duty-free access to instant coffee will help Indian businesses compete with other European suppliers of instant/value-added coffee, such as Germany, Spain and the Netherlands.

FTA will create a powerful springboard for boosting exports of value-added coffee products, particularly Indian instant coffee, to the UK.

Oilseeds:

With reduced tariffs and streamlined procedures, Indian oilseed exporters can become more competitive in the UK market, potentially leading to higher exports.

Textiles:

Zero-duty market access for the textiles and clothing sector accounts for 1,143 tariff lines (or product categories).

India is facing a duty disadvantage vis-a-vis Bangladesh, Pakistan and Cambodia, which had duty-free access to the UK market. The FTA eliminates the tariff on textile imports from India, thereby enhancing its competitiveness.

In textiles and clothing, while the UK’s total imports ($26.95 billion) are lower than India’s global exports ($36.71 billion), India still supplies worth only $1.79 billion to the UK.

Sectors poised for exponential growth include RMG (ready-made garments), home textiles, carpets, and handicrafts, where the removal of duties creates immediate and substantial competitive advantages.

India is expected to gain at least 5 per cent additional market share in the UK within one to two years.

Engineering:

A number of goods to get zero-duty market access.

The UK is India’s 6th largest engineering export market. India’s global exports are $77.79 billion, while the UK imports $193.52 billion worth of such products, yet only $4.28 billion comes from India, signalling strong potential for expansion.

With tariff elimination (as high as 18 per cent) under the FTA, engineering exports to the UK could nearly double in the next five years, reaching over $7.5 billion by 2029-30.

Export of key products like electric machinery, auto parts, industrial equipment and construction machinery projected to grow at 12.20 per cent CAGR.

Pharma:

India exports stand at $23.31 billion globally, and the UK imports were nearly $30 billion, but Indian pharma accounts for under $1 billion, indicating significant headroom for growth.

Generics get the sweet medicine — The FTA’s zero tariff provisions are expected to enhance the competitiveness of Indian generics in the UK market, which remains India’s largest pharmaceutical export destination in Europe.

Number of medical devices like surgical instruments, diagnostic equipment, ECG machines, X-Ray systems will not attract any duty. To make domestic products more competitive.

Chemicals:

The FTA is anticipated to trigger a dramatic 30-40 per cent increase in India’s chemical exports to the UK, propelling figures to an estimated $650-750 million in 2025-26.

In chemicals and allied products, India’s exports stand at over $40.52 billion globally, against the UK’s imports of $35.11 billion, but captures only $843 million of that market, highlighting a potential to scale up, especially with improved market access under the FTA.

Plastics:

Duty-free access presents an opportunity to tap into the UK’s robust demand for plastics, films, sheets, pipes, packaging, tableware, and kitchenware, segments where India has proven manufacturing strength.

Duty-free access allows India to better compete with the UK’s major import sources, such as Germany, China, the United States, the Netherlands, Belgium and France.

Projected growth is 15 per cent, and the target for the next five years is $186.97 million.

Sports goods/toys:

Exports of soccer balls, cricket gear, rugby balls, and non-electronic toys are set to increase.

Indian sports goods and toys will benefit from eliminating UK import duties, making them more price-competitive compared to countries like China or Vietnam, which do not have similar FTAs with the UK.

Gems and jewellery:

India’s total gems and jewellery exports to the UK are valued at $941 million, with $400 million coming from jewellery. The FTA opens up a huge market as the UK imports approximately $3 billion worth of jewellery annually.

Tariff relaxations under the FTA are projected to double India’s gems and jewellery exports to the UK within the next 2-3 years.

Leather:

From 16 per cent to zero, tariffs eliminated on India’s leather and footwear, empowering India’s craftsmanship to walk tall worldwide.

The FTA is projected to add 5 per cent UK market share within 1-2 years. Exports are expected to exceed $900 million.

MSMEs in hubs like Agra, Kanpur, Kolhapur, Chennai to benefit from tariff-free exports; GI protection; simplified standards.

Others:

India stands to benefit from the duty elimination of tariffs on approximately 99 per cent of tariff lines, covering nearly 100 per cent of the trade value.

In key labour-intensive sectors, duties have been reduced to zero from previously up to 20 per cent on marine products, 12 per cent on textiles and clothing, 8 per cent on chemicals, and 10 per cent on base metals.

In the processed food sector, tariffs on 99.7 per cent of lines have been slashed from as high as 70 per cent to zero, offering a major boost for Indian exporters.

India to get duty-free access for its labour-intensive sectors, processed food items, and other high-tariff product segments.

India to get duty-free access in various sectors, including marine, base metals, chemicals, instruments/clocks, minerals, plastic, rubber, textile, transport/auto, tea, coffee and spices.

The UK’s manufacturing sectors will benefit from tariffs cut by India on aerospace (as high as 11 per cent reduced to zero), automotives (from up to 110 per cent — down to 10 per cent under a quota) and electrical machinery (from up to 22 per cent down to either zero of a 50 per cent reduction).

Indian services sectors:

The FTA eases mobility for Indian professionals, including contractual service suppliers: those working on specific projects for a UK client.

Independent professionals: Skilled individuals like yoga instructors, classical musicians, and Chef de Cuisine will find it easier to offer their services in the UK.

Innovation chapter (first of its kind):

Aims to support innovative processes and trade in innovative products. Provisions for joint activities on emerging and transformative technologies, fostering a dynamic environment for learning and development.

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