India-UK FTA: Rs 4,060 crore hit in first year; customs revenue loss to widen by 10th year

NEW DELHI: India could lose around Rs 4,060 crore in customs revenue in the first year of its newly signed free trade agreement (FTA) with the United Kingdom, according to estimates by the Global Trade Research Initiative (GTRI). The amount shows the customs duties India will not collect because of lower or removed tariffs on many British products entering the country.The estimate is based on current import volumes and tariff structures. The trade deal was signed last week and involves phased tariff eliminations that will increase India’s annual revenue loss to Rs 6,345 crore by the tenth year of implementation. That is equivalent to around 574 million British pounds, calculated using trade data for financial year 2025.“Based on these factors, India's revenue foregone in the first year of the agreement is estimated at Rs 4,060 crore,” GTRI founder Ajay Srivastava was quoted as saying to news agency PTI.India imported goods worth $8.6 billion from the UK in 2024-25. A large share of these are industrial products that currently attract an average customs duty of 9.2 per cent. GTRI said India has agreed to eliminate tariffs on 64 per cent of the value of imports from the UK as soon as the agreement is implemented.In total, India will remove tariffs on 85 per cent of tariff lines and reduce duties on another 5 per cent of product categories.However, most agricultural goods have been excluded from the cuts, except items like whisky and gin, which face much higher average tariffs of 64.3 per cent.In turn, the UK imported $14.5 billion worth of Indian goods in the last fiscal year. “This translates to an estimated annual revenue loss of British Pound 375 million (or $474 million or Rs 3,884 crore) for the UK, again based on FY2025 trade data. As Indian exports to the UK expand, the fiscal impact is likely to grow over time,” GTRI noted.Under the Comprehensive Economic and Trade Agreement (CETA), the UK has committed to removing tariffs on 99 per cent of Indian imports. The agreement still requires parliamentary approval in the UK, and its full implementation can take up to a year.