The recently signed India-UK FTA (Free Trade Agreement) is being hailed as a historic moment for both countries, but what does it mean for Indian businesses that export to and import from the UK? How do you ensure that your company leverages the eased regulations to your maximum advantage?
Let’s break it down, focusing on the opportunities and changes to expect.
India – UK FTA: What’s the Deal?
The FTA with the UK promises to be a game-changer for Indian exporters. It is expected to double bilateral trade between India and the UK from $60 billion in 2024 to $120 billion by 2030, which will also lead to significant job creation in India.
Under the agreement, the UK will eliminate tariffs on 99% of Indian exports, making Indian goods much more competitive in the British market. This will particularly benefit sectors like textiles and apparel, leather, gems and jewellery, marine products, IT services, engineering goods, and more.
Similarly, the UK stands to benefit from reduced tariffs on 90% of its tariff lines, particularly for sectors like automobiles, beverages, cosmetics, medical devices, aircraft parts, scientific instruments, etc. For example, tariffs on whisky and gin will drop from the current 150% to 75%, and reduce further over the next decade to 40%.
The FTA’s Benefits for Indian Businesses
Here are the specific takeaways for Indian companies:
- Increased market access: The FTA significantly improves access to the UK market for Indian goods, since most of India’s exports will fall under the reduced tariff scheme
- Cost-competitiveness: With the steep drop in tariffs, Indian goods will be more competitively priced for UK consumers. This is expected to increase demand and grow the volume of exports
- Reduced input costs: Indian companies importing advanced machinery or medical technology from the UK will see considerable reductions in costs, helping them improve profitability
- Professional mobility: The FTA will also ease mobility for professionals in the IT/ITES, financial, professional, and education services sectors. This, along with the new Double Contribution Convention (exempting temporary Indian workers in the UK from social security payments), will help Indian businesses in these sectors gain a competitive edge
Non-Tariff Trade Barriers Removed by the India-UK FTA
Besides steep tariff cuts, the FTA between India and the UK will also ease international trade operations in other ways:
- Simplified procedures, such as deferred duty payments for eligible traders
- Use of electronic documentation instead of paper
- Expedited release of goods at Customs
- Publication of customs laws and rules online in English
Trezix Tip: Accurate and updated Certificates of Origin are essential documents for businesses looking to benefit from an FTA like this. With Trezix, your CoO and all other shipment documents get automated on a single platform.
Leverage FTA Benefits Fully With Trezix
By lowering trade barriers, the free trade agreement between India and the UK can create new opportunities for Indian businesses, boost exports, and make imports of essential goods more affordable.
It’s not just about cutting tariffs; it’s about creating a more streamlined and predictable trade environment.
Indian companies must ensure they are fully prepared to benefit from the FTA by:
- Ensuring that their products meet the UK’s specifications and regulations
- Understanding the customs, VAT, and product labeling laws for trade with the UK
- Building digitized documentation capabilities for smoother trade operations
To make the most of digital-first trade agreements like the India-UK FTA, forward-thinking companies have adopted the Trezix platform to digitalize and unify their cross-border trade operations in one AI-enabled solution.
To learn more, request a demo today.
