Intended 40% cuts to UK export support staff may risk undermining the delivery of the UK-India trade deal.
The Business and Trade Committee warned on Wednesday, 21 January, that billions of sterling pounds of tariff savings from the UK’s trade deal with India may be jeopardised by deep cuts to UK export support staff, who are responsible for helping firms in the practical usage of the agreement.
The report published on Wednesday, 21 January, comes as the government puts the landmark UK-India Comprehensive and Trade Agreement (CETA) before Parliament for ratification.
New analysis by the committee reflects that initial duty savings for exports to India could total USD 536 million a year. It carries the potential of rising to USD 4.29 billion after 10 years as export volumes increase.
However, the committee warns that these savings may not materialise if the Department of Business & Trade delivers deep cuts to support staff without a clear plan. This is to help exporters make the most of the new deal. Additionally, resources are required to reduce India’s extensive ‘non-tariff barriers’.
The CETA with India – the largest bilateral deal since Brexit – could deliver:
The agreement could lead to an annual increase in the UK GDP of USD 6.432 billion in the next 14 years, by the year 2040.
Raise annual bilateral trade with India by USD 3.35 billion: a significant increase from USD 57.62 billion in 2024.
This dealis expected to increase automotive exports by 311% & spirits exports by 180%.
This deal presents the UK with its first opportunity to access India’s central government procurement system.
In a report published on Wednesday, 21 January, which coincides with the start of the official scrutiny period in Parliament, the MPs raise serious concerns about making the deal work practically for British businesses and consumers. Beyond evolving red tape, India’s sprawling administrative system and complex bureaucracy may complicate the realisation of potential benefits.
The committee is urging the government to take an active role in driving the implementation of the deal. This includes supporting exporters and monitoring how the deal is being used. This also includes intervening to resolve barriers as they emerge, including through effective trade remedies.
The government intends to initiate spending cuts for almost 40% of UK trade staff, who would help British businesses use the deal to increase their exports to India. There’s a big question about how on-paper gains will translate into growth for British businesses and the UK economy.
Rt Hon Liam Byrne MP, Chair of the Commons Business and Trade Committee, said that the proposal is the largest free trade deal since Brexit with the potential to deliver billions in tariff savings for UK exporters, boosting growth & creating new employment opportunities. Parliament is being asked to ratify a deal that is promising billions in tariff savings. This is whilst the government is simultaneously cutting nearly 40% of the export staff needed. The aim is to make the most of the new bargain. This carries a serious delivery risk. Ratification is only the start of converting a promise on paper into the prize of new profits. As such, ministers must now table a clear plan supported by real resources to initiate access on paper to exports in practice.
There is also concern that the deal doesn’t go far enough on services or access for skilled professionals. The committee is sceptical about the practical outcomes that will be delivered. With no bilateral investment treaty concluded, ministers should set to work on creating an ambitious and compelling vision for the potential of a BIT to help re-energise these talks.
The Committee says the Government must move quickly on a timeline for implementation. This is to reduce uncertainty and permit businesses to begin acting on the terms of the deal.
