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Tariff Cuts May Weigh on Customs Revenue
Business Standard
|July 28, 2025
The India-UK free-trade agreement (FTA), under which New Delhi has agreed to reduce the weighted average tariff from 15 percent to 3 percent over a period of 10 years, may adversely affect Customs duty collections.
However, economists believe the overall revenue impact could still be positive, driven by higher exports and increased economic activity.
According to Global Trade Research Initiative (GTRI) calculations, India's revenue forgone in the first year of the agreement is estimated at ₹4,060 crore. "By the 10th year, as tariff elimination phases in more broadly, the annual loss is projected to rise to ₹6,345 crore, or around £574 million, based on FY25 trade volumes. These figures are expected to increase as bilateral trade grows," said Ajay Srivastava, founder of GTRI.
This story is from the July 28, 2025 edition of Business Standard.
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