New Delhi [India], July 17 (ANI): India has significant scope to expand its exports to the United Kingdom as it currently supplies only about USD 14 billion worth of goods to the USD 900 billion UK market, according to a Bank of Baroda Economics Research report released on Friday.

'UK represents a US$ 900bn market, out of which only about US$ 14bn is supplied by India. Hence, the export potential is huge,' the report said.

The India-UK Comprehensive Economic and Trade Agreement (CETA), which came into force on July 15, is expected to improve the competitiveness of Indian products by removing tariffs across major export categories.

'As per the terms of the agreement, around 99% of India's exports to the UK will now attract 0% tariff, providing a huge boost to exports,' the report said.

Bank of Baroda estimated that India's exports to the UK could rise sharply over the next five years from USD 13.5 billion currently. Its projections show total exports reaching USD 24.2 billion by FY31, registering a compound annual growth rate of 12.5 per cent.

'By reducing/eliminating duties on almost 100% exports (by value), the CETA provides greater export competitiveness for Indian exporters,' the report said.

Labour-intensive sectors such as textiles and leather are expected to be among the key beneficiaries. Tariff-free access has been provided for Indian textile and apparel exports, which earlier faced duties of around 12 per cent.

'This gives significant export competitiveness to India's exports as duty free access was already available for major competitors such as Bangladesh, Pakistan and Cambodia,' it said.

India's textile and readymade garment exports to the UK are expected to rise to about USD 3.1 billion over the next five years from USD 2.2 billion in FY26.

For leather and related products, the import duty has been reduced from as high as 16 per cent to zero. The report projected India's leather exports to the UK to increase to USD 900 million by 2030 from USD 411 million in FY26.

'This implies that India's market share in UK's total imports of these products would increase from 5% currently to about 10% in the next 5 years,' it said.

Agricultural products are also expected to gain from tariff-free access. Bank of Baroda estimated that marine exports could almost double to USD 253 million by 2030-31 from USD 127 million, while exports of rice and spices are also likely to double.

Electronics could witness one of the strongest increases. 'With the duty on these products reduced to 0%, exports of TV, monitors as well as telecom instruments could benefit. We expect exports under this category to increase to US$ 4bn by FY31,' the report said.

The report also identified pharmaceuticals, engineering goods and gems and jewellery as major beneficiaries of the agreement.

'We expect the total trade between India and UK to increase to US$ 41bn in the next 5 years from US$ 25bn in FY26,' the report concluded. (ANI)