Importers Express Satisfaction Towards India-UK Free Trade Agreement; Alcohol Companies Voice Concerns
Unlock the business scoop as Indian and UK industries eagerly anticipate the India-UK Free Trade Agreement (FTA), with textiles, leather, gems & jewellery, and pharmaceuticals set to soar, aiming to double the $45 billion bilateral trade.
Industry and exporters have welcomed the India-UK FTA, with all but alcohol manufacturers optimistic about export gains. Federation of Indian Export Organisations (FIEO) president S C Ralhan summed it up: "The FTA paves the way for increased competitiveness, strategic investments, and global integration."
In textiles and apparel, tariff eradication will bolster India's edge against competitors like Bangladesh and Vietnam. For leather and footwear, Indian products will enjoy improved access to the UK's high-end retail market. According to Ralhan, streamlined regulatory processes will expedite generic drug approvals.
The UK holds significance for India's gem and jewellery sector, with exports reaching $941 million and imports at $2.7 billion in 2024. Gems and Jewellery Export Promotion Council chairman Kirit Bhansali forecasts a doubling of the bilateral trade in gems and jewellery to $7 billion within two years.
However, the alcohol manufacturing sector expresses concerns. Though India gains zero duty access for 99% of its exports, it must cut duties on whisky and gin, seeing tariffs initially halve from 150% to 75%, and further decline to 40% in a decade. Yet, the government has not fully addressed the pleas of the Indian alcoholic beverage industry, leaving Anant Iyer, director general of Confederation of Indian Alcoholic beverage Companies (CIABC), to hope for the inclusion of the MIP (minimum import price) and the elimination of non-tariff barriers for improved international market access.
The India-UK FTA marks a flow of investment in sectors like textiles, footwear, carpets, cars, and marine products—currently facing UK tariffs of 4-16%. Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), attributes this to the Double Contribution Convention, which provides advantages for Indian professionals on UK assignments, enabling them to qualify for social security while combining service periods across borders.
Indian Alcohol Manufacturers: Challenges and Opportunities
While the agreement offers opportunities for growth through increased foreign direct investment and potential export expansion, it also presents challenges related to increased competition from cheaper UK imports and potential impacts on pricing and profitability. Stay tuned as we delve deeper into the predicted benefits and challenges for the beverage industry in the scope of the FTA.
- Ajay Srivastava, from Global Trade Research Initiative (GTRI), believes that the India-UK FTA will lead to an inflow of investments in various sectors, such as textiles, footwear, carpets, cars, and marine products.
- The Indian economy is poised to experience significant growth in sectors like textiles, leather, pharmaceuticals, and gems & jewellery, with the India-UK Free Trade Agreement said to double the $45 billion bilateral trade.
- Tariff eradication within the India-UK FTA could provide Indian textiles and apparel with a competitive edge over Bangladesh and Vietnam in the UK market.
- The India-UK FTA could create a positive impact for the Indian footwear industry, given improved access to the UK's high-end retail market.
- Export gains in sectors like textiles and footwear are expected, with the exceptions being the alcohol manufacturing sector, which has expressed concerns about competition from cheaper UK imports and potential duty cuts on whisky and gin.
- The Double Contribution Convention under the India-UK FTA could be beneficial for Indian professionals on UK assignments, as it enables them to qualify for social security while combining service periods across borders.
