The UK-India Free Trade Agreement has been described as a major advance in bilateral economic ties by industry groups and business advisors.
CBI Chief Executive, Rain Newton-Smith, referred to UK businesses seeing myriad opportunities in the Indian market and described the announcement as ‘a beacon of hope amidst the spectre of protectionism’.
For the UK, 90% of its tariff lines may see reduced tariffs – particularly benefiting sectors such as beverages, automotive, medical devices and advanced manufacturing explains Agneshwar Sen, Associate Partner and Leader Trade Policy at EY India.
“Automotive tariff reductions from over 100% to as low as 10% through a tariff rate quota system will significantly improve export competitiveness,” he says. “Tariffs on whisky and gin will decrease from a staggering 150% to 75% initially and then to 40% over the next decade.”
Initial analysis suggests an outbreak of predatory pricing or dumping, which would demand a response from the Indian customs authorities, is unlikely, particularly when most players are ‘premiumising’ portfolios so as to maximise margins suggests Jason Holway, Senior Research Consultant at global drinks industry data provider IWSR.
“As ever with alcohol and India though, the impacts of this tariff reduction will be complex and vary state by state, category by category and price band by price band, reflecting the existing intricacy of the industry,” he says.
As home to the largest population of whisky drinkers in the world, India has long been seen as the most exciting growth market for Scotch but has been held back by punitive tariffs according to William Wemyss, Managing Director of Wemyss Family Spirits, which counts Kingsbarns Distillery near St Andrews in Scotland and Darnley’s Gin among its brands.
“For years, whisky producers like us have been locked out of meaningful access despite strong demand and growing appreciation for high quality spirits,” he says. “The phased reduction of tariffs finally gives us a fairer footing to compete in a market that has been out of reach for too long. This deal could open the door to sustained investment, new partnerships and long-term growth not just for our own business but for distilleries across Scotland.”
Biopanda Reagents develops and manufactures in vitro test kits for clinical laboratories, veterinary practice and food safety laboratories, which are distributed throughout Southeast Asia.
The company has been supplying a range of diagnostic products to the Indian market for the last decade notes Sales Manager, Philip McKee.
“We value the business we have done already throughout India and the introduction of the UK-India Free Trade Agreement should benefit us in terms of increased trade with the removal of export barriers,” he says. “This will hopefully increase market access, allowing our distributors throughout India to provide a larger range of our clinical diagnostic products at a lower price.”
However, the Association of the British Pharmaceutical Industry says it is disappointed that the deal does not appear to address longstanding industry concerns about intellectual property (IP) protections for UK life science innovators within the Indian market, particularly the need for regulatory data protection.
“Robust intellectual property protections are fundamental for the innovation our companies deliver but we believe an opportunity has been missed by the UK to demonstrate a commitment to high IP standards for our sector in this agreement,” says Association of the British Pharmaceutical Industry Chief Executive, Richard Torbett.
The agreement eliminates tariffs on 99% of Indian tariff lines with sectors such as textiles, marine products, leather and engineering goods expected to gain significantly.
