India-UK Trade Pact: Implementation Expected to Take Over a Year Following Text Finalization

The recently concluded Free Trade Agreement between India and the United Kingdom is anticipated to take at least fifteen months to come into effect. This timeframe includes a three-month period for the joint legal vetting of the agreement's text, followed by approximately a year for its ratification by the British Parliament. Sources indicate that the broad framework of the agreement's text has been formally exchanged between the two nations. Further specifics are expected to be clarified through discussions with the UK to ensure mutual understanding before the comprehensive text is finalized after the three-month legal review. Following the completion of the legal scrutiny, the agreement will proceed to the UK Parliament for the ratification process, which is estimated to require about twelve months. A decision to lower tariffs on specific products such as alcoholic beverages and vehicles was described as a practical step that served India's interests. It was noted that maintaining high tariffs in these areas had potentially hindered gains in other sectors like textiles, gems and jewellery, and footwear, where improvements are now expected. Benefits are also anticipated within the alcohol and automotive sectors themselves. Regarding concessions on Scotch whisky, the agreement does not include a Minimum Import Pricing condition, a measure that had been sought by the Indian domestic industry. Officials believe that the reduction in duty will not adversely affect local businesses or consumers and could potentially stimulate job creation in the bottling segment. Under the terms of the agreement, India is set to decrease the duty on UK whisky and gin from the current 150% to 75%, with a further reduction to 40% planned over the next decade. In the automotive sector, a restricted opening has been provided for the UK market, with concessions to be introduced gradually over a period of 10 to 15 years. It was clarified that the agreement does not permit the import of low-cost or futuristic vehicles from the UK. Consultations with the domestic automobile industry were held prior to finalizing these offers. Tariff concessions in this sector are structured based on engine capacity for vehicles with internal combustion engines and on price brackets for electric vehicles. On the matter of the UK's Carbon Border Adjustment Mechanism (CBAM), a tax on carbon-intensive imports slated for implementation from January 2027, it has been agreed that India retains the right to take reciprocal measures if the UK introduces this mechanism. Furthermore, the agreement stipulates that if India implements its own carbon levy on these products and provides certification of equivalent taxation, then these goods will not be subject to the UK's carbon tax. The India-UK Free Trade Agreement, announced on May 7, is expected to result in the elimination of tariffs on approximately 99% of tariff lines, covering nearly the entire value of trade for India. The pact is projected to lead to a doubling of bilateral trade in goods and services, reaching $120 billion by the year 2030.