India to Secure Zero-Tariff Access in Key Sectors such as Textiles, Leather, and Metals via the UK Free Trade Agreement
The Comprehensive Economic and Trade Agreement (CETA) between India and the United Kingdom is set to transform India's position in various emerging sectors, offering sector-specific benefits across key Indian industries. This agreement, which aims to eliminate or significantly reduce tariffs and ease market access, particularly benefits labor-intensive and export-oriented sectors.
- Textiles and Clothing: Nearly all textile product categories (around 1,143) enjoy zero-duty access to the UK market, removing tariffs of up to 12%. This move enhances competitiveness and allows India to potentially increase its UK market share by about 5%, leveling the playing field with competitors like Bangladesh and Cambodia.
- Leather and Footwear: Indian exports of leather goods and footwear gain from duty elimination, improving price competitiveness and export potential, notably benefiting leather clusters like those around Vellore, Tamil Nadu.
- Gems and Jewellery: This sector benefits from the general duty elimination on goods, facilitating cost-competitive exports to the UK market.
- Furniture and Sports Goods: These labor-intensive sectors indirectly benefit from tariff elimination and improved market access, making Indian products more competitive in the UK.
- Processed Foods: Tariffs on processed foods have been slashed from as high as 70% to zero on approximately 99.7% of tariff lines, significantly boosting export opportunities for items like ready-to-eat foods, mango pulp, and pickles.
- Marine and Animal Products: Tariffs on marine exports such as shrimp, tuna, and fishmeal are eliminated (previously up to 20%), opening a sizeable $5.4 billion opportunity to expand India's modest 2.25% share of UK marine imports.
- Vegetable Oils: Protected as sensitive items, some vegetable oil exports gain from tariff reduction commitments, enhancing prospects for certain sub-sectors while safeguarding domestic interests.
- Chemicals: Tariffs cut from up to 8% to zero improve export potential for chemicals, benefiting industrial clusters particularly in Gujarat (Surat, Bharuch) and others.
The agreement unlocks market access on almost 99% of Indian tariff lines to the UK, significantly reducing duties that were previously high across many sectors. This facilitates an increase in Indian exports and competitiveness across labor-intensive and value-added sectors, with substantial expected growth in rural and coastal economies due to enhanced agricultural and marine export opportunities. Additionally, Indian professionals in R&D, IT, and various skilled services will benefit from improved mobility provisions, further supporting sectoral growth.
Key states like Maharashtra, Gujarat, and Tamil Nadu stand to gain particularly in pharmaceuticals, engineering goods, apparel, chemicals, marine products, and leather through enhanced export potential and price competitiveness. The India-UK CETA aligns strategically with India's development agenda under initiatives such as 'Make in India' and the Production Linked Incentive (PLI) Scheme.
Duties on electrical and mechanical machinery, plastics, rubber, and sports goods will be eliminated, further enhancing India's industrial capabilities. Tariffs on vegetable oils and plant-based products, including edible oils, oilseed derivatives, packaged foods, tea, coffee, and spices, will be removed, down from tariffs as high as 20%. Marine and animal products, including seafood, dairy, and meat, will now have zero tariffs, down from duties as high as 20%.
The India-UK CETA provides duty-free access for India's labour-intensive sectors, processed food items, and other high-tariff product segments where India holds a strong competitive edge. The zero-duty access to the UK market under the India-UK CETA will spur large-scale exports of value-added garments from India. The agreement provides immediate and significant benefits to high-employment sectors, including textiles, leather, gems and jewellery, organic chemicals, plastics, artisanal goods, and processed food.
- The Comprehensive Economic and Trade Agreement (CETA) between India and the United Kingdom not only eliminates tariffs on vegetable oils and plant-based products but also reduces duties on marine and animal products, providing a significant boost to India's exports of items such as seafood, dairy, and meat in the food-and-drink sector.
- The agreement also offers duty-free access for labor-intensive sectors, including textiles, leather, and gems and jewellery, potentially increasing India's competitiveness in these sectors, particularly in major states like Tamil Nadu and Maharashtra.
- In the finance sector, the reduced tariffs on electrical and mechanical machinery, plastics, rubber, and sports goods under the India-UK CETA are expected to enhance India's industrial capabilities, particularly in industrial clusters in Gujarat and other regions.
