EDITORIAL 2: Closing the deal
Context
INDIA HAS secured market access for key job-creating sectors such as textiles, footwear, gems and jewellery, and marine products — where the UK is set to eliminate duties of up to 20 per cent.
Tariffs now low
- Negotiators have also managed to push for eliminating duties for almost 99.7% of tariff lines in India’s food sector.
- In most food items, the tariffs were as high as 70 per cent. New Delhi extracted enhanced market access in export-oriented sectors such as marine and animal products, including seafood, dairy, and meat products, with tariffs reduced to zero from up to 20 per cent.
- On its part, New Delhi has allowed British companies to participate in a class of public procurement tenders, and also opened the highly-tariffed automobile and alcoholic beverage industries.
For the first time
- For the first time, India has allowed duty cuts for UK-origin alcohol including whisky, brandy, rum, vodka, liqueurs, mead, cider, and tequila.
- These products, which currently face a base customs duty of 150 per cent, will see steep reductions — but only if they meet a Minimum Import Price (MIP) threshold of $5 per litre or $6 per 750 ml bottle.
- For qualifying imports, the duty will be gradually lowered from 110 per cent in Year 1 to 75 per cent by Year 10, through equal annual reductions.
- This design helps shield India’s domestic liquor market from low-cost imports while giving premium UK spirits.
- Also, in a first, India has allowed UK firms to participate in government tenders, offering them Class Two status under ‘Make in India’ rules, which require 20-50 per cent domestic value addition.
- While India had previously opened public procurement under the UAE deal, experts said the deal offered to the UK is the most generous yet.
India-UK Social Security Boost
- This is the most extensive concession in government procurement that India has offered in any FTA to date and marks a strategic shift away from using public procurement as a tool for domestic industrial development.
- The 20 per cent local content rule allows UK firms to use up to 80 per cent inputs from third countries — such as China or the EU — while still receiving preferential treatment, effectively diluting the benefits that programmes like Make in India and Atmanirbhar Bharat were designed to protect.
- The access granted to the UK could also set a precedent for future FTAs with larger economies like the EU or the US, potentially eroding India’s ability to use public procurement as a lever for policy goals such as import substitution, domestic capacity-building, and employment generation.
- Experts said that India seems to have conceded significantly on Intellectual Property Rights (IPR), as UK patent holders are now allowed to give voluntary licences, representing a marked shift from the earlier stance.
- The IP chapter undermines policy space to facilitate access to medicines on two grounds. One, it explicitly mentions a preference for voluntary licensing over compulsory licensing.
- Two, it reiterates the European Free Trade Association (EFTA) provision which allows the patent holder to withhold information on the working of patents for three years.
Shedding protectionism
- The UK deal is significant as it marks the beginning of integration between the advanced services sector in the UK and that of India.
- India has finally opened its doors to high-end British cars and whisky, albeit in a phased manner.
- The India–UK Free Trade Agreement ensures comprehensive market access for goods across all sectors, covering all of India’s export interests.
- India will benefit from tariff elimination on approximately 99 per cent of tariff lines, covering nearly 100 per cent of trade value — offering opportunities to boost bilateral trade between India and the UK.
- he two countries have also concluded negotiations on the Double Contribution Convention Agreement, or social security pact, which would help avoid double contributions to social security funds by Indian professionals working for a limited period in Britain. However, talks on the Bilateral Investment Treaty (BIT) are still ongoing.
Conclusion
The India–UK FTA boosts exports and services, opens new markets, and marks a shift from protectionism, setting the tone for future global trade deals.