Securing an agreement is expected to significantly accelerate trade between the UK and India – increasing bilateral trade by £25.5 billion, £15.7 billion of which is expected to be from rising exports from UK businesses into India.
As soon as the deal comes into force, UK products will benefit from a saving up to an estimated £400 million a year, from India cutting its tariffs on existing trade alone, which could increase to around £900 million a year after staging over 10 years. This will help exports from a variety of high growth sectors, such as advanced manufacturing sectors including automotives, aerospace, electrical circuits and high-end optical products, and medical devices.
The full tariff schedules and Rules of Origin (RoO) are not yet available, so we don’t yet have the detail as they might affect manufacturing technology products. The agreement states India will remove or reduce tariffs on 90% of tariff lines (64% immediately), which covers 92% of existing goods imports from the UK, so there is scope there for the existing Indian tariffs to be reduced, although the details we have so far suggest that these will be concentrated in advanced manufacturing exports such as auto parts, machinery (pumps & valves are mentioned specifically but not machine tools) and tools, and medical technology devices, including surgical, dental and veterinary instrument.
The announcement implies RoO will continue to allow inputs from other countries “To qualify for reduced tariffs, the rules of origin specify that a product must either be wholly obtained or significantly transformed through processing in either the UK or India”
The trade deal will assist business movement, simplification of customs procedures and an undertaking to the earlier release of goods and potential deferment of customs duties for certain trades, strengthened IP rights and access to Government procurement.
The announcement does not cover either market enforcement procedures or CBAM
India and UK continue to work on developing the legal text associated with the FTA agreement.