On Tuesday, India and the United Kingdom sealed a landmark trade deal covering multiple sectors following three years of negotiations.
The India-UK trade deal, which has been in the works since 2022, is estimated to increase bilateral trade between both countries by £25.5 billion ($34 billion) by 2040, add £ 4.8 billion a year to the UK economy and boost wages in the UK by £2.2 billion every year in the long run.
Details of the Deal
The deal, between the world’s fifth and sixth largest economies, is focused mainly on trade in whisky, cars, and food. It also covers the clean energy, Digital media, and Financial services sectors. The deal would, more importantly, allow British firms to compete for Indian contracts and Indian workers to easily work in Britain.
Speaking on the deal, Indian Prime Minister Narendra Modi said the trade deal was “ambitious and mutually beneficial”. British Prime Minister Keir Starmer, on his part, said the strengthened alliance would reduce trade barriers in a “new era for trade”.
The deal represents Britain’s most significant trade deal since it left the EU in 2020. Under the deal, India’s trade ministry said 99% of Indian exports would benefit from zero duty, including textiles, while Britain will see reductions on 90% of its tariff lines.
Under the terms of the deal, Whisky tariffs will be halved from 150% to 75% before reducing to 40% by the deal’s 10th year, while auto tariffs will go from over 100% down to 10% under a quota system.
Reactions to the Deal
The Scotch Whisky Association said the deal would be “transformational” for the industry, and the UK auto industry body SMMT said it appreciated the considerable effort of negotiators despite the apparent compromises made.
Saif Malik, CEO, UK and Head of Coverage, UK, Standard Chartered, said, “The UK-India Free Trade Agreement is a significant achievement. It will create new opportunities for UK and Indian businesses, enable greater access to one of the world’s largest and most dynamic markets, and drive growth and innovation across the UK-India corridor.
“We welcome this strong commitment to partnership and prosperity”. He concluded.
