The Comprehensive Economic and Trade Agreement came into force on 15 July, lowering or removing tariffs across a wide range of UK exports to India. For Scottish businesses, Scotch Whisky is perhaps the most obvious beneficiary. The 150% tariff on whisky has fallen to 75% and will reduce progressively to 40% over the next decade.
Other sectors stand to benefit too. India has agreed to remove or reduce tariffs on 90% of tariff lines, with UK exports including food and drink, cosmetics, medical devices, and machinery among those benefiting from improved access.
The arrival of lower tariffs is a starting point, but Scottish exporters need to be prepared before they enter the market. This means finding the right commercial partners, putting robust agreements in place and protecting the brands and intellectual property that provide and boost the value in their products.
Protect the brand before building the market
A brand can be one of a business's most valuable assets, particularly in food, drink and consumer goods. Greater access to India should therefore prompt businesses to review how that intellectual property is protected before substantially increasing their presence.
This is because a UK trademark does not per se provide protection in India.
The trade agreement includes provisions covering intellectual property rights, including trademarks, geographical indications, designs, patents and copyright. This creates a stronger framework for trade between the two countries, but businesses still need to take responsibility for protecting their own assets.
Businesses planning to enter the market should consider their Indian trademark position at an early stage and take specialist legal advice where required.
Doing this early is important because, once products become more visible, particularly through a portfolio of distributors, retailers, agents and online channels, the risk of imitation, unauthorised use, infringement and confusion around a brand and its intellectual property can increase. A Scottish food producer, fashion business or industrial manufacturer entering the Indian market could have spent years building its reputation at home, only to find its ability to control its brand lost or its reputation irreparably damaged if intellectual property protection and robust contractual arrangements overseas have been treated as an afterthought.
Get the route to market right
For many exporters, particularly those without an established presence in India, success will depend heavily on local importers, distributors, agents and retailers. There can be a desire to move quickly when a new market becomes more accessible, but exporters should resist treating the agreement with their local partner as simply the paperwork that follows the commercial decision. Choosing the right partner is one of the most important decisions a business will make.
Getting that relationship right means having clarity from the outset over where and how their products can be promoted and sold, whether a distributor has exclusive rights, what level of sales or marketing activity is expected and how pricing and payment will work.
They also need to consider what happens if things do not go to plan. A distributor that performs well can accelerate growth, while one that underperforms, misrepresents a product or simply turns out to be the wrong commercial fit can become a significant barrier to operating successfully in a new market.
This makes termination provisions equally important, including an understanding of what happens to stock, customer relationships and use of the brand after the relationship ends.
Making the opportunity count
The UK-India trade deal has removed a significant barrier for Scottish exporters, but lower tariffs alone will not guarantee success in a new market and a lack of planning and structure may cause irreparable damage and incur unrecoverable costs.
Businesses need to focus on the practicalities of turning that access into sustainable growth. That means understanding how they will reach customers, choosing commercial partners carefully and protecting their brands before they gain greater visibility.
Those that put the right protections and partnerships in place from the outset will be far better positioned to turn improved market access into long-term growth.
Euan Duncan, Partner in MFMac’s MMT team
