India's revenue foregone in first year of trade pact with U.K. estimated at ₹4,060 cr: GTRI
The calculation is based on the current import figures from the United Kingdom.
By the tenth year, it said, as tariff elimination phases-in more broadly, the annual loss is projected to rise to $6,345 crore or around British Pound 574 million, based on FY2025 trade volumes.
The India-U.K. free trade agreement, which was signed on July 24, will lead to a loss of customs revenue for both the countries, as tariffs are reduced or eliminated on a wide range of goods, GTRI added.
India imported $8.6 billion worth of goods from the U.K. in 2024-25.
Industrial products make up the bulk of these imports and face a weighted average tariff of 9.2 per cent.
Most agricultural products, subject to much higher average tariffs of 64.3 per cent, were excluded from tariff cuts, except for items like whisky and gin.
It said that India has committed to eliminating tariffs on 64 per cent of the value of imports from the U.K. immediately as the implantation starts.
Overall, India will eliminate tariffs on 85 per cent of tariff lines and reduce tariff on 5 per cent of tariff lines or product categories.
"Based on these factors, India's revenue foregone in the first year of the agreement is estimated at ₹4,060 crore," GTRI Founder Ajay Srivastava said.
He added that the U.K. imported USD 14.5 billion worth of goods from India in the last fiscal year, with a weighted average import tariff of 3.3 per cent.
Under the comprehensive economic and trade agreement (CETA), the U.K. has agreed to eliminate tariffs on 99 per cent of Indian imports.
"This translates to an estimated annual revenue loss of British Pound 375 million (or $474 million or ₹3,884 crore) for the U.K., again based on FY2025 trade data. As Indian exports to the U.K. expand, the fiscal impact is likely to grow over time," it said.
The implementation of the pact may take about a year as it requires approval from the U.K. Parliament.
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