It has long been the great prize for Britain’s post-EU trade freedom – a deal with what is now the world’s most populous country.
India has agreed its most generous free trade agreement with the UK, which is at the same time Britain’s biggest post-Brexit trade deal.
It means a big boost for key UK exports such as whisky and cars which will see very high tariffs or taxes on imports slashed.
This is not a normal deal taking two way trade down to zero tariffs. India is a highly protectionist economy. So, while 99% of tariffs on India’s exports to the UK will be eradicated, 85% of British exports will not be tariffed going to India.
But because British exports are so much higher value than Indian exports of clothing, footwear, and food, this should be worth £15bn extra for British exports and £10bn for India by 2040. This could change, though. For example, 88,000 cheaper Indian cars will now be able to be imported tariff free.
The UK government sees this as a win-win which helps exporters, creates jobs, and means lower prices for consumers. This is all part of, in Trade Secretary Jonathan Reynolds words, making the UK the “most connected market in the world” – with a Brexit reset, a deal with the US, “pragmatism” on China, and new deals with India, and soon the Gulf.
But there is also a much bigger picture here. This is the worlds fifth and sixth biggest economies doing a much closer deal to increase trade at a time when the top two – the US and China – are involved in a brutal trade war, and the Trump administration is tariffing everywhere.
This may be one of the reasons why this elusive deal, coveted by many previous governments, has finally got over the line. It also turns the page on decades of missed economic opportunities, given the strong historic connections between the two nations.
