Policy

India-UK FTA: UK govt lists out the benefits to its industry

Amiti Sen New Delhi | Updated on August 29, 2021

Pact may help reduce average import tariffs on British goods in India

The proposed India-UK Free Trade Agreement(FTA) can bring in gains for the British industry in terms of increased market access, the UK government has pointed out to its industry.

At present, the average tariffs in India on UK exports are more than three times the average tariffs levied on Indian goods in the UK. New Delhi also put in place higher non-tariff barriers affecting trade, it said.

In an information note for the consultation relating to the India-UK FTA prepared by the UK Department of International Trade, it was noted that while the simple average tariff on goods imported into the UK from India was 4.2 per cent, while it was at 14.6 per cent for UK exports to India. The FTA can help reduce these tariffs, it said.

Also read: Retrospective tax law amendment will help India attract more foreign investments: UKIBC

Manufacturers and exporters in the UK have time till August 31 to submit their inputs on the proposed FTA with India, following which the UK Department for International Trade will go through the suggestions to finalise its negotiating position. The formal negotiations are likely to begin before the end of the year, as per indications given by both sides.

Higher market access

Majority of product lines, about 66 per cent, exported by India to the UK faced no tariff lines while only 3 per cent of product lines from UK could enter India tariff-free, it added. “It is clear that the UK would seek higher market access for a large number of items apart from automobiles and wines & spirits. India, too can gain in goods, by looking for market access in sectors where it faces high tariffs such as garments and textiles and footwear,” a person tracking the developments in India told BusinessLine.

Highlighting, the growing scope of India-UK economic relations, the note pointed out that UK’s total trade in goods and services with India increased by 51 per cent from £9.8 billion in 2011 to £14.8 billion in 2019, its exports of goods and services to India have increased by 3 per cent from £8.2 billion to £8.5 billion over the same period.

Role of FTAs

Evidence suggests that FTAs can lead to large, sustained increases in trade in goods between partner countries, by around 32 per cent, the note said.

India also has more non-tariff barriers, the note pointed out. “In comparison to the UK, India has a greater number of sanitary and phytosanitary measures, technical barriers to trade, quantitative restrictions, tariff-rate quotas, and safeguards,” it stated quoting data from WTO’s Integrated Trade Intelligence Portal. “India, too, could gain considerable market access if there is an agreement on bringing down non-tarrif barriers,” the source said.

In services, India’s restrictions are substantially higher than the UK across all sectors covered by the OECD Services Trade Restrictiveness Index, the note stated. The sectors with greatest restrictions are rail freight transport, legal, accounting and architecture, it said. “While the index may show high restriction in services trade in India, in the UK too, Indian service providers face various kinds of barriers which may lessen through mutual recognition agreements for service providers. India’s gains in services will also come from a more liberal visa regime that will ease movement of workers,” the official said.

Published on August 29, 2021

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