India offers duty relief on UK pastries, pet food, cosmetics; sensitive sectors excluded

New Delhi: India has granted tariff concessions to a wide range of British goods under the recently signed free trade agreement (FTA), including pastries, pet food, cosmetics and microwave ovens, while keeping sensitive sectors out to safeguard domestic interests.

The comprehensive economic and trade agreement (CETA), which was signed on July 24, also offers duty-free access to UK products such as cakes, protein concentrates, dog and cat food, soaps, shaving cream, detergents, and home appliances like air conditioners and washing machines.

However, the concessions are phased across sectors to give Indian industry sufficient time to prepare for enhanced competition from UK firms.

The agreement will come into force in about a year as it requires approval from the British Parliament.

According to the analysis of think tank GTRI, India has committed to reducing or eliminating import tariffs on nearly 90 per cent of goods originating from the United Kingdom.

"The agreement includes phased concessions across a broad range of sectors -- from chocolates and consumer appliances to industrial inputs -- while strategically excluding sensitive items like tea, coffee, and gold," GTRI Founder Ajay Srivastava said.

India imposes steep duties of 110 per cent on coffee, tea, and sausages. These items are excluded from any tariff relief under CETA, reflecting India's effort to protect domestic farmers and food processors.

Tariff phase-outs have been structured over varying timeframes. For instance, chocolates, currently facing a 33 per cent import duty, will see that rate reduced to zero over seven years in equal annual cuts.

Snack items such as pastries and cakes and protein concentrates, taxed at 33 per cent and 44 per cent, respectively, will become duty-free over a 10-year period.

In the processed food category, pet foods like dog and cat food, currently taxed at 22 per cent, will benefit from full tariff elimination within seven years.

Similarly, personal care and hygiene products are also covered. India will phase out its 22 per cent duty on cosmetics and the 11 per cent duty on soaps over 10 years.

However, import duty on shaving creams and gels and detergents, both at 11 per cent, will be scrapped immediately upon the agreement's implementation.

In the home appliance segment, India has agreed to eliminate its 22 per cent duties on air conditioners and washing machines over 10 years, while microwave ovens will become duty-free immediately.

Among industrial and recyclable goods, waste paper, currently taxed at 11 per cent, will see full tariff elimination over 10 years.

Duties on silver bars, now at 10.75 per cent, will also be phased out over a decade, while no such concession has been granted for gold bars, which face the same duty rate. Palladium taxed at 11 per cent, will also become duty-free in 10 years.

India has taken a differentiated approach to scrap metals, it said.

Ferrous scrap, already taxed at a minimal 2.75 per cent, will see duties eliminated immediately. Brass scrap, facing the same duty rate, will become duty-free over 10 years.

However, aluminium scrap has been kept outside the scope of tariff concessions, GTRI said.

In aerospace and machinery, turbo-jets with thrust exceeding 25kN (kilonewton) face a current import duty of 8.25 per cent, which will be gradually reduced to zero over seven years.

India will also cut duties on UK alcoholic drinks -- including whisky, vodka, gin -- only for bottles priced above USD 6 per 750ml. For qualifying imports, tariffs will fall from 110 per cent to 75 per cent in year one, and to 40 per cent by year 10, it added.

"While CETA opens the door for UK exporters across a range of sectors, India has carefully tailored its concessions to balance foreign access with domestic sensitivities," Srivastava said.