Today (15 July) marks the first implementation day of the UK-India Comprehensive Economic and Trade Agreement (CETA).
Negotiations began under the Boris Johnson administration and were concluded last year by prime minister Sir Keir Starmer’s government.
The Department for Business and Trade (DBT) writes that the agreement could boost UK GDP by £4.8bn and real wages by £2.2bn in the long run.
A number of sizeable tariff reductions have also been announced, including whisky tariffs being cut from 150% to 40%, automotives from 100% to 10% and up to 22% reductions in some cosmetic products.
Announcing the deal’s implementation deal last month, business and trade secretary Peter Kyle said:
“The deal gives British exporters an edge over international competitors, and I would encourage all businesses to ensure they are properly prepared to allow them to sell to India’s huge market in the years to come.”
Chartered Institute of Export & International Trade director general Marco Forgione said when the deal was announced:
“With the increased export opportunities, as well as analysis showing that communities across every region of the UK will benefit from the overall uplift to UK GDP, this deal is a win for regional economies.
“Beyond goods exports, the benefits of the access to India’s thriving services sector is not to be underestimated, particularly as India’s economy has remained largely resilient, despite recent geopolitical challenges.”
‘Significant’ tariff reductions
David Johnstone, the DBT’s head of FTA utilisation, told the March instalment of Global Trade Live that the deal is expected to increase bilateral trade by over £25bn by 2040.
He said that from today – “day 1” – the deal will also cut Indian tariffs on UK exports by £400m, rising to £900m by year 10, as other tariffs are phased out.
“What this means for those interested in the [export] opportunities in India, is that there’s a whole series of tariff lines where there’s reductions”.
“While some of them get the headlines”, he added, with 75-150% reductions, “they can distract from the smaller tariff reductions of 10, 20 or 30%, all of which are really significant”.
Tariff reductions of as little as 5% can make a significant difference to profitability and enabling businesses to engage with new markets, so he urged UK firm to investigate reductions on tariff lines relevant for their goods.
“It’s absolutely worth your time to see if your good, that you export, will benefit, because there’s just so many reductions.”
Make sure to register
In order to benefit from tariff reductions, traders will need to claim the preferential rates available.
In her member-exclusive explainer article on the UK-India deal, Chartered Institute customs practice lead Caroline Rowden writes that “preferential tariffs are only available where the goods qualify as originating and the right evidence is in place”.
One requirement for claiming preference for the India trade deal is to register with HMRC. This enables traders to self-certify origin rather than obtaining an origin certificate from a competent authority each time you send a consignment.
To register, businesses will need to provide their trading name, Economic Operator Registration and Identification (EORI) number and at least one email address.
Origin evidence will need to be gathered in order to claim preference, and this should be done in conjunction with any suppliers.
For more information about how to prepare for trade with India under the new trade deal, members can read Rowden’s full article here.
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