India-UK Trade Deal: Why Indian textile exporters could benefit big—See winners list

A long-awaited trade pact between India and the UK is finally set to become operational with effect from July 15. Formally known as the Comprehensive Economic and Trade Agreement (CETA), the India-UK Free Trade Agreement (FTA) is set to become a reality nearly a year after it was signed following about three years of negotiations. This also marks India's first bilateral trade pact with a European country.

A number of key Indian sectors, ranging from textiles and apparel to engineering goods, medicines and marine products, are set to benefit once the agreement kicks in. The trade deal is expected to provide a major boost to Indian exporters, with the UK offering tariff-free access on about 99 per cent of India's tariff lines covering almost all exports by value.

India-UK Trade Deal: What Piyush Goyal said

Describing the agreement as a "triumph of economic statecraft", Commerce and Industry Minister Piyush Goyal said its simultaneous implementation along with the Double Contribution Convention (DCC) will create significant opportunities for Indian exports.

"By securing immediate duty-free access on 99 per cent of our tariff lines, we have systematically dismantled long-standing tariff walls. This will effectively level the playing field, allowing our textiles, leather, marine, engineering, and processed food sectors to compete with no disadvantage and supply their world class products," said the trade minister.

Which sectors will see UK tariffs reduced to zero?

The agreement is set to eliminate tariffs across several export-oriented sectors for India.

This tariff relief is expected to make Indian products more competitive in the British market while supporting Indian exporters across manufacturing and labour-intensive industries.

India-UK Trade Deal: Indian textile makers could be major winners

Ready-made garment exporters are estimated to gain from duty-free access into one of the world's largest apparel markets.

Indian textile exporters currently account for only about 6.6 per cent of the UK's textile imports, leaving significant room for market-share gains.

Several Dalal Street-listed textile companies draw a chunk of their revenue from exports. Here's what their export share looks like:

Source: Zee Business research

India-UK Trade Deal: Liquor sector in the spotlight

The deal is also set to reshape the premium liquor market. Import duties on British whisky and gin will be cut from around 150 per cent to 75 per cent initially and then further to 40 per cent over the next decade.

This move alone, say analysts, is expected to make imported premium brands more competitive.

Could Tata Motors' JLR benefit?

The agreement introduces a quota-based framework under which tariffs on UK-made automobiles will fall from 100 per cent to 10 per cent within specified limits.

This could be particularly relevant for makers like Tata Motors, say analysts.

A range of premium Jaguar Land Rover (JLR) models sold in India are sourced from the United Kingdom.

What else does the trade deal offer?

Apart from tariff reductions, the agreement includes a broad services package covering 137 sub-sectors, including IT, IT-enabled services (ITeS), financial services, education, healthcare, engineering and consultancy.

What is Double Contribution Convention?

It is a social security agreement that seeks to prevent workers from paying social security contributions twice when temporarily working between the two countries.

This arrangement exempts Indian professionals and employers from dual social-security contributions during temporary assignments in the UK, for an extended period of five years instead of three years. Over 75,000 Indian professionals and over 900 companies are expected to benefit from this arrangement.