India-UK trade deal kicks in: PM says boost for farmers & MSMEs, Pg1

Key Highlights:

• The India-UK Comprehensive Economic and Trade Agreement (CETA) came into force on Wednesday.
• Under the agreement, 99% of Indian goods entering the UK and 90% of UK goods entering India will face duty-free or reduced tariffs.
• Prime Minister Narendra Modi hailed it as a significant moment, while British High Commissioner Lindy Cameron called it a "new chapter".
• This marks India's first comprehensive trade deal with a developed country.
• The deal is expected to boost India's labour-intensive exports like textiles, footwear, and gems & jewellery.

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Detailed Insights:

• The India-UK CETA was negotiated over four years, navigating significant political changes in the UK.
• India has reduced tariffs on approximately 90% of products, while the UK has eliminated tariffs on 99% of Indian exports.
• For the first time in an FTA, India has offered major concessions on imported cars and alcoholic beverages from the UK.
• Tariffs on British cars will reduce from up to 110% to 30% initially, reaching 10% by year five, with an annual quota starting at 20,000 vehicles.
• Tariffs on British alcoholic beverages will decrease from 150% to 75% initially, further reducing to 40% by year 10.
• The agreement introduces a system of self-declaration of origin for UK exporters, replacing traditional certificates, which is a significant customs change.
• India has removed up to 14% tariffs on UK medical devices, with phased reductions for sensitive items, addressing concerns about dependence on other nations.
• The UK has allocated quotas for India's iron and steel exports, projected to increase from $850 million to over $1 billion.
• The labour and environment chapter of the agreement is non-binding, which is seen as a win for India.
• India did not secure an exemption from the UK's proposed Carbon Border Adjustment Mechanism, set to take effect from January 1 next year.
• The deal on social security contributions will benefit 75,000 Indian professionals and 900 firms by exempting them from UK National Insurance for five years.

Key Concepts Involved:

• Comprehensive Economic and Trade Agreement (CETA): A broad trade pact covering goods, services, investment, and other areas to deepen economic ties.
• Free Trade Agreement (FTA): A treaty between two or more countries to reduce or eliminate certain barriers to trade, such as tariffs and quotas.
• Carbon Border Adjustment Mechanism (CBAM): A policy tool that imposes a carbon price on imported goods based on their carbon emissions during production.