The India-UK trade agreement took effect on Tuesday and the headline number is good enough to get you to pop the champagne, or in this case, the not-so-expensive scotch. From this week, 99% of India's imports into Britain, by tariff lines, will reach Britain duty-free. The duties on textiles drop to zero, from eight to twelve per cent. The tariff is reduced by four to eight per cent. on leather and footwear. Marine exporters have to pay up to a 21.5 per cent levy, while engineering goods overnight lose 18 per cent tax. In terms of market access, this is the widest that India has achieved from any developed economy and it comes four years after initial talks began and just a year after Commerce Minister Piyush Goyal signed the agreement in London along with his British counterpart.

The government has not undersold it Goyal said it is a removal of the old tariff barriers that would facilitate Indian products like textiles, marine and engineering goods to compete without any disadvantage. That enthusiasm has been matched by industry bodies. The deal is expected to have a significant impact on competitiveness in the food processing, gems and textiles sectors, and provide small exporters entry into a market which has been traditionally dominated by European firms, ASSOCHAM has called it a "historic milestone that brings together two of the world's oldest democracies".

However, without all the trappings of the celebration, a more sobering picture emerges, one which has been brought to the forefront of the trade economists' minds for days, and one that deserves far more attention than it has received. Take into account the true magnitude of what is being unlocked. Last year the United Kingdom brought in goods valued at approximately $929 billion. The Indian share of that was only $15.2 billion or about 1.6 per cent. The other way around, however, is quite different: Britain's exports to India total less than 3.4 per cent of the world's total merchandise exports of $445 billion. Bilateral trade is estimated to be worth between $56 billion and $58 billion, with both governments aiming to increase the volume almost to $120 billion by 2030. That's a lofty goal and tariff removal is not the answer.

It is not a political issue, it is a structural issue. Before this agreement was implemented, over half of India's exports to Britain were already duty-free, so the advantage of the new tariff schedule is limited. The sector-level data puts the point more brutally. Last year, India sold $77.8 billion worth of engineering goods abroad, but shipped only $4.3 billion to the UK, which imports almost $194 billion worth of engineering goods each year. In the case of chemicals, India exported $40 billion abroad and imported $908 million from Britain, where chemicals made up more than $35 billion of India's total imports. Pharmaceuticals are no different, with $25.8 billion in exports worldwide representing only $1 billion 3.2 per cent of what the UK imports. Although Britain has significant production capacity, iron and steel exporters only control 5.2 per cent of the British market. These are not free trade areas that a tariff of zero will instantly fill in.

The things that hold back Indian exporters from the market are a horde of nonprice barriers, from product certification to sanitary and safety standards, testing facilities to traceability systems and buyer relationships that are built over years. The food exporters require laboratories to certify their product to meet British sanitary requirements. Before a UK buyer will start talking to machinery and electronics companies there are international recognised quality marks that must be met. Automobile part manufacturers are required to meet rules-of-origin requirements which are much more stringent on paper than in the press release. This does not appear in a tariff schedule and nothing goes away because a treaty comes into effect.

Indian exporters are also facing new headwinds despite the dismantling of old tariffs.The new factors are also creating hurdles for Indian exporters on the downgrade of old tariffs. Britain's extra tight steel protection, lower quotas and high above-quota duties can compensate for any benefits the new pact brings to the sector. As the carbon border tax is rumoured to be on discussion in London, it is set to impose additional costs upon carbon-intensive Indian exports at a time when India's exports are expected to become competitive. Alcohol tells an inverse story: India's own liquor exports worldwide are less than half a billion dollars, a scale problem no tariff cut can solve, but Britain's whisky and gin makers stand to gain up front as India cuts its duties on Scotch from 150 per cent to 75 per cent now and 40 per cent in a decade.

This does not deflate the agreement. By most indicators, it is the UK's most important bilateral trade agreement since Brexit, and is projected to boost UK GDP in the long term by £4.8 billion more than any other trade deal negotiated from scratch after Britain leaves the European Union. It provides British companies with access to the government's procurement market of approximately £38 billion worth of goods for the first time, has granted a 3-year exemption from social security payments for mobile workers and promised customs clearance within 48 hours. It is the first India has created with a country in the G7 group since Brexit changed the trading order in Europe, an assurance to other countries that Indian industry is up to the standards of the developed market.

The truthful interpretation is this deal doesn't do the walking for anybody. Whether the garment units in Tiruppur, the marine processors in Gujarat, or the engineering workshops in Ludhiana achieve the promised benefits is uncertain, given that the testing labs and certification systems will require testing, export financing will be negotiated, and the not-as-glamorous administrative tasks of bringing Indian production into line with British expectations will be carried out. Tariffs were the simple part of the deal. The development of the ability to use them is the more difficult longer project which starts today.