Good diplomacy, good business, Pg10.

Key Highlights:

• UK Prime Minister Keir Starmer visited India with a large business delegation, emphasizing the India-UK trade partnership [the Comprehensive Economic and Trade Agreement (CETA)] as a "launch pad for growth".
• The CETA covers over 99% of tariff lines in industrial and agricultural products, aiming to double the bilateral trade to $120 billion by 2030.
• In 2024, the UK imported $12.9 billion in goods and $19.8 billion in services from India, while India imported $8.4 billion in goods and $13 billion in services from the UK.
• India faces potential 50% tariffs from the US, making the UK market a crucial destination for diversifying exports.

Detailed Insights:

• The CETA negotiations demonstrate India's ability to secure mutually beneficial trade agreements, serving as a positive precedent for negotiations with the EU.
• Despite a current trade surplus with the UK, India's export potential in sectors like gems and jewellery, textiles, and leather/footwear remains significantly untapped.
• Before CETA, India faced MFN tariffs averaging 9-12% on textiles, but now enjoys zero tariffs, leveling the playing field with countries like Bangladesh and Vietnam.
• India will gradually reduce import duties on Scotch whisky and gin from 150% to 40% over 10 years, but a shorter timeline would signal a stronger trade partnership.
• To fully leverage CETA, India needs structural reforms to enhance competitiveness, improve access to capital, streamline trade facilitation, and reduce regulatory burdens.
• Addressing issues like lengthy customs clearance times (17.3 days in India vs. 6.7 days in Bangladesh) and improving the ease of doing business are crucial for export growth.

Key Concepts Involved:

• CETA (Comprehensive Economic and Trade Agreement): A trade agreement between two countries that reduces or eliminates tariffs and other trade barriers.
• MFN (Most Favored Nation): A status or level of treatment accorded by one state to another in international trade.
• Tariff: A tax or duty imposed on goods when they are moved across a political boundary.