India–UK FTA: Export Prospects for Indian Agriculture

In order to evaluate the impact of a likely India–UK FTA post-BREXIT on select Indian agricultural product exports, the current analysis has adopted a partial equilibrium approach. Since the average tariffs on agricultural products are quite low on an average, we have estimated the impact only for a zero-tariff scenario for all the agricultural items. As a departure from existing work, we have used the recently estimated import demand elasticities at six-digit HS level by Ghodsi et al. (Import Demand Elasticities Revisited. Vienna Institute for International Economic Studies, Vienna, 2016) in our user-defined SMART simulation analysis. In line with evidence from the literature involving north–south agri-trade reform in the presence of NTBs, not much changes are observed even at zero tariffs, and hence other scenarios of partial liberalisation were not attempted. Next, we tried to find out the reasons for low gains from full-tariff liberalisation. Five products were identified where a possible restriction due to NTBs might impact India’s export prospects to the UK. Applying the methodology outlined in Bradford (Rev Econ Stat 85:24–37, 2003), an estimate of NTB restrictiveness was obtained for the identified agricultural products. It corroborated with our initial apprehensions that not only were NTBs high but restrictiveness also went up over time. Hence if the proposed FTA does not address the issue of NTBs, even a full liberalisation in terms of tariffs will not lead to any substantial benefits for Indian agri-exports.