UK, India Sign Trade Deal, Cut Tariffs by 150% on Whiskey, 100% on Cars

The United Kingdom and India have signed a landmark bilateral trade agreement, marking a significant step in their economic relations. This agreement, signed under the leadership of UK Prime Minister Keir Starmer, aims to reduce tariffs on key products, including whiskey and automobiles, as a response to the rising tide of global trade protectionism.

The agreement is set to gradually lower import tariffs on a wide range of goods from the UK, with the majority of traded items expected to be duty-free within a decade. Specifically, tariffs on spirits like whiskey and gin will be reduced from 150% to 75% initially, further decreasing to 40% over ten years. Automobile tariffs, currently exceeding 100%, will be slashed to 10%. Nearly 90% of all traded goods will achieve zero tariffs within the same period.

This development comes at a time of heightened global trade tensions, particularly with the United States' recent imposition of higher import tariffs, which has strained relations with multiple countries. The UK government anticipates that this agreement will boost bilateral trade by 255 billion pounds (approximately 340 billion dollars). In 2024, the total trade volume between the UK and India reached 426 billion pounds, an 8.3% year-on-year increase, although the UK faces an 84 billion pound trade deficit with India.

India, as the UK's 11th largest trading partner, holds strategic importance for the UK post-Brexit. The Starmer administration views this agreement as a crucial milestone in its "Global Britain" strategy, positioning it as a key response to U.S. trade protectionism. Analysts suggest that this agreement offers a new pathway for multilateral trade systems amidst the backdrop of major economies erecting trade barriers.

The agreement is not only an economic move but also a strategic one. It aims to counter the U.S.'s efforts to curb China's technological advancements, particularly in sectors like semiconductors and electric vehicles. By strengthening trade ties with India, the UK is asserting its role in the global economy and diversifying its trade partnerships. This move is seen as a significant development in the ongoing trade tensions between the U.S. and China, highlighting the increasing importance of regional trade agreements in a fragmented global trade landscape.

By fostering economic growth and innovation, and promoting the principles of free trade and mutual benefit, the UK and India are setting a new standard for international trade relations. This agreement is expected to create new opportunities for businesses in both countries, filling gaps left by the U.S.-China trade war and sending a clear message about the importance of free trade in the global economy.