The India-UK Free Trade Agreement (FTA) is unlikely to significantly impact domestic consumer brands, according to industry executives cited by the Economic Times.
Key Industry Voices
Jayen Mehta, managing director at Amul, which makes chocolates and dairy products such as cheese and yoghurts, noted "The UK does not produce cocoa beans," according to the Economic Times. Rakshit Hargave, managing director at Britannia Industries, said "The FTA is unlikely to create a significant impact on consumer prices, though we have to study the fine print closely."
Sam Mahandru, founder of Goa-based IndoBevs (which makes BroCode and Glen Eden alcobev drinks), said "While consumers will benefit, the impact on retail prices is likely to be more measured as the duty savings will be shared across the value chain." He added that "The FTA will push producers to invest more thoughtfully, innovate faster and build brands that can compete on quality, not protection."
Tariff Reduction Details
According to an EY India Policy Alert report released on Wednesday, 99% of India's exports by value are expected to benefit from duty-free access to the UK. In return, India will progressively reduce tariffs on 90% of tariff lines, covering 92% of UK imports, over a transition period of up to 10 years. Depending on the categories, customs duties will be reduced progressively over a decade.
| Metric | Detail |
|---|---|
| India's exports gaining duty-free access to UK | 99% by value |
| Tariff lines on which India will reduce duties | 90% of lines |
| UK imports covered by India's tariff cuts | 92% |
| Transition period | Up to 10 years |
Premium Competition and Compliance
Premium categories may face increased competition. Ahuja of Le Marche — a retailer of premium and luxury gourmet foods imported from countries including the UK, Switzerland, and Spain — said "Companies operating in premium categories such as biscuits, chocolates, sauces, breakfast cereals and gourmet packaged foods may face increased competition over time, but rather than a pricing threat, the agreement will encourage Indian manufacturers to focus on innovation, quality enhancement and premiumisation."
Retailers like Nature's Basket and Modern Bazaar also stock similar imported goods. The FTA is also expected to impact beauty e-retailers such as Nykaa and Tira, which sell imported beauty and grooming products from the UK. A Nykaa spokesperson declined to comment.
Suresh Nair, partner, indirect tax at EY India, said in the report: "FMCG stakeholders may align procurement, pricing and portfolio strategies with phased tariff reductions while assessing the competitive implications of increased UK market access. A robust review of product classification, rules of origin, certification and customs documentation would be critical to secure preferential benefits and mitigate compliance risks."
Overall, the phased tariff reduction and shared duty savings across the value chain are expected to limit the direct impact on retail prices, while encouraging Indian manufacturers to improve quality and innovation.
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