In an exclusive interaction on ETMarkets Smart Talk segment, Lalli outlines how sectors like logistics, retail, and green energy are best positioned to benefit from reduced tariffs, simplified regulations, and enhanced market access.
With 99% of India’s exports set to become duty-free and increased mobility for professionals, the agreement promises to strengthen economic and strategic ties between two of the world’s largest economies. Edited Excerpts –
Q) You described the India-UK FTA as a long-awaited and positive development—what specific changes do you foresee for businesses operating across both countries?
A) Reductions in tariffs across various sectors and a commitment to easing barriers to trade can only be beneficial for both countries – we foresee greater collaboration in various fields, including the retail, automotives, logistics, pharma and health sectors.
Q) Can we say that this FTA is being described as a “game-changer” for India-UK trade. Can you elaborate on the immediate and long-term benefits this agreement holds for both countries, especially for India?
A) It is most definitely a game-changer. India and the UK have for many years had a strong trading partnership. India is the second largest investor in the UK in terms of number of projects, a position that the nation has held for five consecutive years, and Indian companies such as Tata employ huge numbers of people in the UK (Tata itself employs around 8000).
This FTA will give companies on both sides greater confidence in moving forward with investment and collaboration with each other.
The UK has also been a significant investor in India over the years, and we expect greater investment in sectors such as technology, renewable energy, and infrastructure.For India, a significant percentage of Indian exports to the UK will become duty-free – 99% according to the UK Government. This benefits a range of sectors and products, including apparel, textiles, leather goods and frozen shrimp. India’s service exports are also likely to increase, benefitting sectors such as IT.The FTA eases some of the tax requirements for Indian workers, which will aid mobility of personnel working for Indian companies.
Business mobility will help companies on both sides of the fence to move faster in taking advantage of the opportunities now opened for them. Some of the tariff reductions are on a sliding scale so the benefit increases over time.
Q) From your recent visits, which sectors in India do you believe are best poised to benefit from deeper India-UK collaboration?
A) Logistics, infrastructure, green energy and retail. There is always a significant amount of excitement and enthusiasm in these sectors and business and investors are more than ready to seize on new opportunities.
Q) With zero-duty access granted to 99% of India’s exports, how will this affect India’s position in global trade? What sectors do you see benefiting the most?
A) Greater levels of trade will be facilitated for India, which in all likelihood will assist in making up shortfalls that may result from US tariffs. This is a big step in changing India’s approach to global trade.
Q) You mentioned the rise of Western brands entering India. How do you see the FTA accelerating this trend?
A) There is already huge interest on the part of Western brands – we see this increasing as companies have greater confidence in the commitment made by both countries to open each other’s markets more fully.
Q) How do you interpret the FTA’s potential to boost private capital mobility between India and the UK?
A) As well as the immediate benefits of the FTA such as reductions on tariffs, another important aspect is what it says about the intentions of both nations.
India and the UK are giving a strong signal to the market around how they view each other and want to continue working together in the future. That is powerful.
It is likely to give businesses, individuals and investors confidence in moving to the India market, and see such a move as less of a risk.
Q) Given the geopolitical context, how crucial is this agreement for strengthening India-UK strategic and economic alliances?
A) This is a major step for both countries in strengthening their relationship. They are respectively numbers five and six in terms of the largest economies in the world (with some estimates even putting India above Japan at number four) and in times of geopolitical uncertainty, standing together on various issues will boost the impact of both countries’ responses.
The two countries have a lot in common, and businesses from each side have been successfully operating in each other’s countries for decades.
Q) Do you anticipate changes in inbound/outbound M&A activity as a result of this agreement?
A) As mentioned, the FTA will give individuals, businesses and investors greater confidence and stability, and sends a clear signal to the market that the UK and India plan to continue developing their relationship for years to come.
Wherever there is uncertainty and volatility, deals tend to be delayed or rethought. Conversely, with greater confidence and stability comes greater appetite for deals.
The FTA certainly has the potential to have a positive effect on both inbound and outbound M&A activity.
Q) The reduction in customs duties on premium vehicles. Could this drive meaningful demand for UK-based luxury auto brands in India?
A) Yes, we believe it could and will. We see such brands already on Indian roads, even at a time when customs duties are substantial, so a lowering of duties will only increase the appetite for such brands.
Q) How significant is the halving of the 150% import duty on Scotch and gin for the overall AlcoBev industry in India? Could it be a turning point for premium spirits in the market?
A) Having noted the demand for premium liquor in India on my frequent visits (and India’s own growing offering in this regard), I think the demand will be stimulated.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
