The two sides have also announced that they can prefer to conclude an interim pact, something like an early harvest agreement.
Food and drink will be a key sector for the ETP trade discussions and discussions will focus on both tariff and non-tariff issues between the two countries.
The UK Foreign, Commonwealth and Development Office has already partnered with India’s Food Safety and Standards Agency (FSSAI) to streamline the import process using technology for better and more transparent risk management.
Arpita Mukherjee, professor at ICRIER, points out that India is one of the largest producers of a number of agricultural commodities and the UK is one of the largest importers of food and beverages worldwide, ranking 5th ($ 59,211 million) in 2019.
She said India had a positive trade balance of $ 475.30 million with the UK in food and beverages. India’s total food and drink trade to the UK increased from $ 479.97 million in 2009 to $ 873.72 million in 2019 (i.e. 82.04 percent). India’s exports to the UK include products such as rice, tea, fruits and vegetables, frozen products such as shrimp and organic products. Over 88 percent of UK exports to India in 2019 were “Ethylene Alcohol, Undenatured; with an alcohol content of less than 80% by volume; Spirits, Liqueurs and Other Alcoholic Drinks ”(HS 2208), commonly known as Scotch Whiskey.
The other UK exports to India include food preparation, crustaceans, cheese and curd, bread and baked goods, and cereal grains.
“Thus India’s export basket to Great Britain is more diversified than that of the United Kingdom to India. In trade negotiations, the areas of interest lie not only in current trade flows, but also on trade barriers. For example, until recently India had the 150 percent tariff in 2019 for Scotch whiskey bottled in the country of origin and bulk Scotch whiskey imported for bottling in India. India also imposed a 150 percent tariff on intermediate products, namely “undenatured ethyl alcohol with an alcohol content of 80% vol. or higher (HS code 220710) which is used to mix with production in India for domestic use and export. This will be a key issue that the UK raised during the trade discussions, ”she said.
She added that more recently, taking into account the concerns of her trading partners, the Union budget of 2021-22, the basic customs fee (BCD) has been reduced to 50 percent but an Agricultural Infrastructure Development (AIDC) mindset of 100 percent has been introduced, who kept the BCD + AIDC at 150 percent of previous tariff levels. While the tax of any kind is generally not regarded as a duty, Section 115 (1) of the Finance Act 2021 refers to AIDC as a duty. Hence, the UK will most likely include it in trade discussions.
India and the UK intensified their post-Brexit trade and cooperation discussions, having identified and prioritized the sectors, following the UK Prime Minister’s planned visit to India after February 2021.
However, PM Boris Johnson canceled the visit due to a Covid-19 pandemic. It was agreed that the Prime Ministers of both countries will speak towards the end of 2021 and discuss the next steps. They are also expected to meet before the G7 in June 2021.
In 2019, Great Britain was India’s twelfth largest export partner in terms of the value of food and beverages (share of 2.16 percent) and ranked 17th among import partners (share of 1.09 percent).
India was Great Britain’s 22nd largest export partner (the value share of British exports is 0.8 percent) and ranked 16th among import partners (1.2 percent share). In the same year India had a positive trade balance of $ 475.30 million in food trading with the UK. India’s total trade with the UK increased from $ 479.97 million in 2009 to $ 873.72 million in 2019 (i.e. 82.04 percent).