In the newly signed Comprehensive Economic and Trade Agreement (CETA) between India and the United Kingdom, India has provided generous tariff concessions on a large number of British products. The historic free-trade deal, which is awaiting the regulatory approval of the British Parliament and is likely to be operational in a year, is one of the most pervasive trade liberalisation measures that it has undertaken within the present decade in India.
The deal allows duty cuts in most of the goods of UK origin in phases, and the duty-free goods include cakes, pastries, chocolates, pet foods, cosmetics, and home appliances, among others. An example is the value-added tax on chocolates and pastries, whose tariff is up to 33 per cent, will drop to zero within seven years or so and duties on pet food, whose value-added tax is twenty-two per cent, will also be fully scrapped within a period of seven years. On the same note, soaps and cosmetics that have a 22 per cent and 11 per cent duty, respectively, will also not be taxed after 10 years.
The household appliances industry will boast of some significant gains as well. The taxes that are currently imposed on imports such as air conditioners and washing machines, which are currently at 22%, will be avoided within a decade, whereas tariffs on microwave ovens will be immediately eliminated. Imports of high technology, like turbo-jets, which are used in the aerospace industry, would also be duty-free in seven years, which will usher in the Indian machinery and aviation industries.
There will also be the lowering prices of luxury and alcohol, such that the tariffs on the bottles of premium quality whisky, gin and vodka above 6 per 750ml will be cut to 75 per cent in the initial year and ultimately to 40 per cent by the tenth year.
But to balance between market access and protection of local interests, India has been able to tactfully keep sensitive industries such as tea/coffee, sausages, and even gold clear of tariff benefits.
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