Businesses in sectors relying heavily on manual labor to gain competitive advantage will be aided
The recently signed India-UK Free Trade Agreement (FTA) offers significant benefits for Indian micro, small, and medium enterprises (MSMEs) in labor-intensive sectors such as textiles, leather, and gems & jewellery.
Key benefits of the FTA for Indian MSMEs include:
- Duty-free access on nearly all exports to the UK: Nearly 99% of Indian exports to the UK will now be duty-free, which significantly reduces costs and increases competitiveness for Indian MSMEs in sectors like textiles, leather, and gems & jewellery.
- Textiles and Apparel: The FTA covers 1,143 product categories in the textiles and apparel sector, all made duty-free, which is expected to help India gain around 5% more share in the UK market. Important MSME products benefiting include ready-made garments, carpets, handicrafts, and home textiles.
- Leather and Footwear: Reduced or zero tariffs improve export opportunities and competitiveness for leather products and footwear, which are significant MSME-driven sectors.
- Gems and Jewellery: MSMEs engaged in gems and jewellery production gain from reduced duties, facilitating higher exports and better integration into UK markets.
- Enhanced MSME participation: The agreement explicitly supports MSMEs through improved market access, removal of tariff barriers, and inclusion of provisions aimed at facilitating small and medium enterprises in the broader trade framework.
- Labour-intensive sector boost: The agreement addresses labor-intensive industries including textiles, leather, and related sectors, aiming to promote sustained export growth by eliminating tariffs that previously hindered competitiveness.
- Protection of sensitive sectors: While the agreement offers broad liberalization, it protects sensitive agricultural and dairy sectors, ensuring that MSMEs in labor-intensive manufacturing focus on export growth without sudden competition in those protected areas.
The FTA is anticipated to provide instant competitiveness for Indian MSMEs in the UK market. The agreement's provisions may help MSMEs adapt to and benefit from digitalization and sustainable production practices. MSMEs will gain entry into UK public contracts, opening new avenues for growth and expansion.
The FTA is expected to give Indian MSMEs an edge over competitors in labor-intensive sectors. Increased export opportunities in textiles, leather, and footwear are likely to create jobs in hubs like Tirupur and Kanpur. The Revised Stand-Up India scheme is likely to be implemented by September, further supporting MSME growth.
Commitments to ethical labour and sustainability practices will ensure MSMEs meet global expectations. The FTA provides duty-free access to the UK's $23 billion market, offering a significant opportunity for Indian MSMEs to expand their reach and strengthen their position in the global market.
[1] India-UK Free Trade Agreement: All you need to know
[2] India-UK Free Trade Agreement: What it means for MSMEs
[3] India-UK FTA: A boost for Indian MSMEs
[4] India-UK FTA to boost Indian textile, leather, and gems & jewellery exports
- The India-UK Free Trade Agreement (FTA) is anticipated to offer significant benefits for Indian micro, small, and medium enterprises (MSMEs), particularly in labor-intensive sectors such as textiles, leather, and gems & jewellery, by providing duty-free access to the UK's $23 billion market.
- With the FTA's provisions, Indian MSMEs may adapt to and benefit from digitalization and sustainable production practices, expanding their reach and strengthening their position in the global market.
- The FTA's commitments to ethical labour and sustainability practices will ensure that Indian MSMEs meet global expectations, creating an edge over competitors in labor-intensive sectors and potentially generating new jobs in hubs like Tirupur and Kanpur.
