GTRI projects ₹4,060 crore loss for India in first year of India-UK FTA

India’s newly inked Free Trade Agreement (FTA) with the United Kingdom is projected to deliver a Rs 4,060 crore blow to customs revenue in its very first year, according to estimates by the Global Trade Research Initiative (GTRI). The fiscal impact is set to grow annually, touching Rs 6,345 crore, or roughly £574 million, by year ten of implementation.

The trade pact, signed last week, mandates phased tariff eliminations on a large swathe of British imports, especially industrial products, which currently attract an average duty of 9.2 per cent. GTRI founder Ajay Srivastava noted: “Based on these factors, India’s revenue foregone in the first year of the agreement is estimated at Rs 4,060 crore.”

India imported $8.6 billion worth of goods from the UK in FY 2024–25. With the agreement, tariffs on 64 per cent of import value are to be eliminated immediately, with further reductions bringing the total to 85 per cent of tariff lines, said a TOI report. However, agricultural imports, barring high-tariff items like whisky and gin, remain largely untouched.

In return, the UK imported $14.5 billion of Indian goods in the same period. The UK is expected to forgo £375 million (Rs 3,884 crore) in customs revenue per year, owing to its commitment to eliminate duties on 99 per cent of Indian imports under the Comprehensive Economic and Trade Agreement (CETA).

While the pact is anticipated to catalyse bilateral trade and deepen market access, it also raises concerns about its impact on government coffers, particularly in the short to medium term. The FTA still awaits parliamentary clearance in the UK, with full implementation potentially taking up to a year.