A trade deal that tests India’s competitive confidence, Pg8

Key Highlights:

• The Comprehensive Economic and Trade Agreement (CETA) between India and the United Kingdom came into force earlier this month.
• Effective July 15, approximately 99% by value of India's exports will enter the UK duty-free.
• This agreement particularly benefits India's labour-intensive sectors like textiles, garments, leather, and auto components.
• The deal includes a Double Contribution Convention exempting Indian professionals in the UK from double social security payments for up to five years.
• India has agreed to gradually reduce duties on UK-built cars from 110% towards 10% and on Scotch whisky from 150% towards 40% over a decade.
• The two nations aim to double their bilateral trade from $56 billion by the end of the decade.

Detailed Insights:

• The duty-free access for Indian goods in the UK closes a competitive gap, as countries like Bangladesh and Cambodia already had such access.
• The removal of duties on generic medicines allows India, the world's largest supplier, to compete more effectively in the UK market.
• The Double Contribution Convention is expected to save over 75,000 workers and 900 companies approximately $600 million annually.
• The phased reduction in import duties on UK cars and Scotch whisky is designed to give Indian industries time to enhance their competitiveness.
• The agreement emphasizes that exposure to international competition can strengthen domestic industries by pushing them to innovate and improve.
• Effective utilization of the CETA requires Indian exporters to be prepared, procedures to be streamlined, and enterprises to be well-informed about the opportunities.

Key Concepts Involved:

• Comprehensive Economic and Trade Agreement (CETA): A broad trade pact covering goods, services, investment, and other areas to deepen economic ties.
• Double Contribution Convention: An agreement preventing individuals from having to pay social security contributions in two countries simultaneously.
• Tariff: A tax or duty to be paid on a particular class of imports or exports.
• Free Trade Agreement (FTA): A pact between two or more countries to reduce barriers to imports and exports among them.