What is Expected to Get Cheaper as India & UK Conclude Free Trade Agreement?
On May 21, 2022, India and the United Kingdom concluded a historic Free Trade Agreement (FTA), which promises to boost bilateral trade and investment between the two countries. The agreement, which has been hailed as a significant step towards strengthening economic ties, is expected to benefit various sectors, including the distilled spirits, automotive, cosmetics, and food industries. In this blog post, we’ll take a closer look at what’s expected to get cheaper as a result of this agreement.
Distilled Spirits: The Most Notable Gainer
One of the most significant benefits of the India-UK FTA is the reduction in tariffs on distilled spirits. Currently, tariffs on gin and whisky stand at 150%, which will be halved to 75% post the agreement. This means that UK-imported gin and whisky will become cheaper in India, making them more accessible to Indian consumers. The move is expected to benefit the UK’s spirits industry, which has been facing challenges in the Indian market due to high tariffs.
The reduction in tariffs is expected to increase the demand for UK spirits in India, which has a large and growing middle class with a taste for premium liquor. India is already one of the largest markets for spirits in the world, and the FTA is expected to further boost the country’s spirits industry. The agreement will also provide a fillip to the UK’s spirits industry, which has been facing challenges due to the COVID-19 pandemic.
Automotive Sector: Tariffs to be Cut by 90%
Another major beneficiary of the India-UK FTA is the automotive sector. Currently, tariffs on UK-imported vehicles stand at 100%, which will be cut to 10% post the agreement. This means that UK-imported vehicles will become cheaper in India, making them more competitive in the market.
The reduction in tariffs is expected to benefit both Indian and UK automakers. Indian automakers will be able to reduce their costs by importing components and parts from the UK, while UK automakers will be able to access the Indian market with lower tariffs. The agreement is also expected to increase the demand for UK-imported vehicles in India, which is one of the fastest-growing automotive markets in the world.
Other UK Goods to Face Lower Tariffs
In addition to distilled spirits and vehicles, several other UK goods will also face lower tariffs as a result of the India-UK FTA. These include:
- Cosmetics: Tariffs on UK-imported cosmetics will be reduced from 20% to 10%.
- Chocolates: Tariffs on UK-imported chocolates will be reduced from 30% to 20%.
- Soft drinks: Tariffs on UK-imported soft drinks will be reduced from 30% to 20%.
- Electrical machinery: Tariffs on UK-imported electrical machinery will be reduced from 20% to 10%.
- Biscuits: Tariffs on UK-imported biscuits will be reduced from 30% to 20%.
These reductions in tariffs are expected to increase the competitiveness of UK goods in the Indian market, making them more attractive to Indian consumers. The agreement is also expected to increase trade between the two countries, which is expected to benefit both economies.
What the FTA Means for Indian Consumers
The India-UK FTA is expected to benefit Indian consumers in several ways. Firstly, the reduction in tariffs on distilled spirits, vehicles, and other UK goods is expected to make them cheaper and more accessible. This will give Indian consumers a wider range of choices and better value for their money.
Secondly, the agreement is expected to increase competition in the Indian market, which will drive prices down and improve the quality of goods and services. This will benefit consumers across the country, particularly in the middle and lower-income segments.
Finally, the FTA is expected to create new job opportunities in the Indian market, particularly in the services sector. This will give Indian consumers more options and better services, which will improve their overall quality of life.
Conclusion
The recently-concluded India-UK Free Trade Agreement is expected to have a significant impact on various sectors, including distilled spirits, automotive, cosmetics, and food industries. The reduction in tariffs on UK goods is expected to make them cheaper and more competitive in the Indian market, which will benefit Indian consumers and businesses. The agreement is also expected to increase trade between the two countries, which will drive economic growth and create new job opportunities.
As the agreement comes into effect, Indian consumers can look forward to cheaper and better-quality goods and services, which will improve their overall quality of life. The agreement is a significant step towards strengthening economic ties between India and the UK, and it has the potential to benefit both economies in the long run.
Source:
