New UK Global tariff may benefit Indian exporters of USD 32 billion

The new UK Global Tariff (UKGT), that has been proposed by Britain to be applied on imports after December 31, 2020, may benefit Indian exporters as it allows duty-free imports of 507 goods (at HS Code 6 digit) worth USD 32 billion. According to a study by MVIRDC World Trade Center Mumbai, India has export potential in these goods as it is already exporting them to the UK although its market share in that country is limited.

Under UKGT, the UK government has liberalised import of more than 901 goods (at HS 6 digit tariff lines) by allowing duty-free import of these goods. Of these, India exports 507 goods worth USD 547 million. However, the annual import of these 507 goods by UK is valued at USD 32.03 billion.

This leaves a huge scope for Indian exporters to enhance market access in that country by taking advantage of the zero duty.

On January 31, 2019, the UK exited from the European Union and chose a transition period of 11 months up to December 31 this year for negotiating its trading relationship with the EU and other countries.

With the deadline of this transition period about to end, the UK government has introduced its own tariff schedule known as UK Global Tariff (UKGT) to replace the EU’s Common External Tariff which will be in force till December 31.

"The UK government has placed this new tariff schedule before its Parliament for approval. Once it is approved, the new tariff schedule will be applicable to the goods imported by the UK from any country (except the countries with which it has signed free trade agreements)," said a statement.

Thus, until the UK signs a trade agreement with India, this new tariff schedule will be applicable to goods exported from this country.

At a recent industry event, the UK Secretary of State for International Trade Elizabeth Truss said, “The new UK Global Tariff will be twice as beneficial for Indian exports as the EU’s existing rules.”

The new tariff schedule would eliminate import duty on certain organic and inorganic chemicals from 6 to 7 per cent which was applicable under the EU’s Common External Tariff (CET). In some of the organic chemicals such as cyclic alcohols, India has 54 per cent share in UK’s total imports. In aldehydes, (which is another organic chemical), India has a share of 72 per cent.