India-UK FTA kicks in: What changes for consumers, industry

📌 Summary:

• The India-UK Free Trade Agreement (FTA) came into effect, India's first comprehensive deal with a developed country after four years of talks; it sets the template for the ongoing India-EU negotiations
• Tariff cuts: India reduced tariffs on ~90% of products; the UK eliminated tariffs on 99% of Indian exports — boosting labour-intensive exports (textiles, footwear, gems & jewellery) and helping India match competitors like Bangladesh
• First-time Indian concessions: British car tariffs cut from up to 110% to 30% in year one, to 10% by year five (quota 20,000 rising to 37,000 vehicles); alcohol tariffs cut from 150% to 75%, then 40% by year 10; cosmetics and medical-device duties (up to 14%) reduced, cutting dependence on China
• Trade-facilitation firsts: self-declaration of origin by UK exporters (replacing certificates), likely to become the norm for EU/US deals; a social-security deal exempts ~75,000 Indian professionals and ~900 firms from UK National Insurance for five years (avoids double contribution)
• Caveats: the labour and environment chapter is non-binding (a win for India against non-tariff barriers), but India got NO exemption from the UK's Carbon Border Adjustment Mechanism (CBAM), effective January 1 next year; UK steel import curbs had been a flashpoint, now iron & steel exports projected to rise from ~$850m to over $1bn

🎯 UPSC Relevance: GS3 (trade liberalisation, industrial policy, export competitiveness) and GS2 (India-UK bilateral, economic diplomacy amid a fracturing trade order).

📝 Prelims Facts:

• India-UK FTA is India's first comprehensive FTA with a developed economy; UK eliminated tariffs on 99% of Indian exports
• British car tariffs: 110% to 30% (year 1) to 10% (year 5); alcohol: 150% to 40% (year 10)
• CBAM = Carbon Border Adjustment Mechanism, a carbon-pricing levy on imports; UK version starts Jan 1 next year

🔑 Key Term: CBAM — a border carbon tax ensuring imported carbon-intensive goods face a cost comparable to domestic producers.