India-UK trade deal comes into effect: What’s cheaper and which industries benefit the most – all you need to know | Today’s news

The India-UK Comprehensive Economic and Trade Agreement (CETA), which came into effect on Wednesday, is expected to boost bilateral trade by reducing trade barriers and creating new opportunities for businesses on both sides.

For Indian exporters, the pact opens the door to the UK’s £90 billion annual public procurement market. At the same time, Indian consumers are likely to benefit from lower prices for several premium British products as import duties have been reduced under the deal.

Who benefits the most from India-UK CETA?

The India-UK CETA gives zero duty access to almost 99% of India’s exports, covering almost the entire value of the goods India sells there. This essentially means that all those Indian products that previously attracted import duties can now enter the UK market duty-free, making them more competitive with goods exported to the UK from Germany, China, France and other countries.

“By granting zero duty access to nearly 99% of India’s exports, covering nearly 100% of trade value, CETA is expected to enhance India’s export competitiveness,” the government said in a press release.

The biggest beneficiaries are some individuals, labour-intensive sectors and businesses that employ millions of Indians. These include:

• Indian farmers and fishermen: Better access to the UK market through the removal of tariffs is expected to create new export opportunities and boost revenues.
• Labor intensive industries: Sectors such as textiles, leather, footwear, gems and jewellery, handicrafts, food processing, auto parts, plastics and organic chemicals are poised to see higher exports and job creation.
• MSME: Streamlined customs procedures, paperless trade and digital systems are expected to reduce compliance costs. Duty-free access for 99% of India’s exports to the UK could also save 4-16% on duties on products such as textiles, leather, jewellery, footwear and food.
• Experienced professionals: Better access to the UK services market, ensuring mobility and recognition of professional qualifications are expected to create new opportunities for Indian professionals and young talent.
• Women and businesswomen: The agreement includes provisions to promote greater participation of women, youth and underrepresented groups in trade, innovation and entrepreneurship. It also reinforces commitments to internationally recognized labor rights, gender equality and fair working conditions.

What will make Indian consumers cheaper?

Consumers may not see the price drop immediately, but several imported British products are expected to become more affordable as tariffs are gradually reduced under the deal. The extent and timing of price reductions will largely depend on the tariff reduction plan and the extent to which importers and retailers pass on the benefits to consumers.

Some of the products expected to get cheaper after this tariff cut include:

• Scotch whiskey and gin.
• Premium British cars and luxury motorcycles
• Cosmetic products
• Chocolates and cookies
• Medical devices
• Select food products

The price reduction will not be immediate for all of these products. While tariffs on some goods were reduced from day one, tariffs on others will be gradually reduced over several years, according to the agreement.

Import duties on Scotch whiskey and gin, for example, were halved to 75% from 150% effective Wednesday and will fall further to 40% over the next decade. The immediate impact is expected to be lower prices for imported spirits, although the benefit to consumers will depend on how much of the duty savings is passed on by companies and distributors.

Which sectors are protected?

Sensitive sectors, including agriculture and strategically important industries, were protected through exemptions or gradual reductions in tariffs under the Domestic Producer Protection Agreement. These include:

• Agricultural goods: Dairy products, cereals and millets, pulses, apples, edible oils, oats and vegetables remain protected under the pact.
• High value products: Gold, jewelry, lab-grown diamonds, certain essential oils, critical energy fuels, marine vessels, worn clothing, critical polymers and monofilaments, smartphones, and optical fibers are also protected.
• Strategic sectors: Industries developed under Make in India and the Production-Linked Incentive (PLI) will be phased out over 5, 7 or 10 years, not immediately.

The pact represents India’s first major free trade agreement with a developed economy to become operational in recent years. The government expects to increase bilateral trade between the world’s fifth and sixth largest economies to $100 billion by 2030.