India-UK Free Trade Pact: A Revenue Trade-off Analysis

India is poised to sacrifice Rs 4,060 crore of customs revenue in the inaugural year of its free trade agreement with the UK as tariffs on a variety of goods get slashed or eradicated, according to think tank Global Trade Research Initiative (GTRI).

This prediction reflects current import trends from the UK, and by the tenth year, with the broader elimination of tariffs, the annual revenue loss is expected to balloon to Rs 6,345 crore, or around British Pound 574 million, based on FY2025 volumes, GTRI reported.

The agreement, penned on July 24, is projected to affect customs revenues negatively for both nations while opening up trade avenues. Industrial items, making up the bulk of India's imports, encounter a weighted average tariff of 9.2%, whereas higher-tariffed agricultural goods largely escaped cuts.

(With inputs from agencies.)