India and United Kingdom recently agreed upon a major free trade agreement, the UK’s largest such post-Brexit trade deal. This commitment comes in time for the needs of communities. The Indian and British prime ministers say the world’s fifth and sixth largest economies are keen to deepen ties as competition grows between the United States and China.
The new partnership agreement will eliminate 99% of tariffs on Indian goods exported to the UK. In exchange, 85% of UK exports to India will be tariff-free. This lowering of tariffs will no doubt help spur more activity between the two countries. The UK government is touting this deal as one of the biggest wins for both countries. They hope it will provide a boost for important industries including whisky and cars.
Given that India has long been a very protectionist country, this represents a historic move on India’s part to liberalize its trade policy. Trade deal would increase British exports by a staggering £15 billion by 2040. At the same time, India stands to benefit by £10 billion over the same timeframe.
Trade Secretary Jonathan Reynolds underscored the importance of this collaboration. He went on to claim that it places the UK on the way to being “the most connected market in the world.” The agreement is expected to produce jobs in the UK. It will save Americans money at the same time by ending tariffs on the importation of 88,000 Indian-made cars that are far more affordable.
Tariffs that are currently high – or even prohibitive – on British imports like whisky and cars will be dramatically lowered. This amendment will greatly improve the competitiveness of British goods in the vast Indian market. The Indian economic landscape is well-known as a notoriously protectionist, economic black box.
The historic ties between the UK and India cement this deal, creating a new shared economic vested interest. Both countries are in the process of coming to terms with a transformative new global trade landscape. This agreement aims to deepen their economic relationship and create opportunities for both partners.