UK and India finalize post-Brexit commerce accord in midst of trade turmoil
India and the UK seal their most impressive trade deal since Brexit - a historic milestone
On the bustling scene of May 6, 2025, India and the UK announced a groundbreaking trade agreement. Hailed by London as the most ambitious deal since leaving the European Union, this agreement marks a significant step in reclaiming Britain's commercial autonomy.
India, home to the world's most populous nation with 1.4 billion inhabitants, offers a colossal market to the UK. In fact, India is expected to become the third-largest economy worldwide by 2028, making it an attractive partner for the UK's economic growth.
Threats from the United States and the significance of the new deal
Negotiations with India were rekindled in February 2025, during a time of disrupted transatlantic relations caused by US President Donald Trump's tariff threats, which have since been partially implemented. Simultaneously, the UK initiated trade discussions with the US, their second-largest trading partner. Despite the hopes of eliminating or reducing some of these taxes, the agreement with the US is anticipated to be of lesser magnitude compared to the deal with India, as their post-EU trade agreement holds greater importance.
The UK has explored numerous trade agreements post-Brexit, securing deals with Australia, New Zealand, and joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). However, these agreements, while bolstering strategic and political ties, contribute little to the UK's commercial interests. The post-Brexit trade agreement with the EU remains the UK's most valuable, and the agreement with India is expected to significantly augment bilateral trade by £25.5 billion per year, adding approximately £4.8 billion to the UK's GDP.
Strong economic and cultural bonds
Britain boasts both economic and cultural ties with its former colony. Approximately 1.9 million individuals of Indian origin reside in the UK, contributing to the flourishing commercial exchanges, totaling over £40 billion annually, as per government data.
The newly inked agreement will see 85% of India's tariffs on the UK reduced to zero within a decade. Specific taxes on British cars will be halved from over 100% to 10%, under certain unrevealed quotas. Whisky and gin tariffs which were contentious points in negotiations will be halved to 75%, before being further reduced to 40% after ten years. These changes could potentially generate an additional £1 billion in exports over five years, creating around 1,200 jobs, estimates Mark Kent of the Scotch Whisky Association.
Upon the reduction of tariffs, UK consumers may expect to see a descent in prices for certain clothing, footwear, and food products, such as frozen shrimp.
So, here's to a stronger economic bond between two nations rich in history and culture. As India gallops towards becoming the world's third-largest economy and the UK navigates its post-Brexit journey, this trade agreement promises significant growth for both nations.
Also, don't forget to check out our exclusive subscribers-only article: How post-Brexit trade agreements have steered India and the European Union closer
- Narendra, the Prime Minister of India, announced a significant trade agreement with the UK on May 6, 2025, which has been hailed as the most impressive deal since Brexit.
- Encouraged by the disrupted transatlantic relations due to US President Donald Trump's tariff threats, the UK saw India as an attractive partner for its economic growth, given India's anticipated status as the third-largest economy by 2028.
- The post-Brexit trade agreement between the UK and India is expected to generate an additional £1 billion in exports over five years, creating around 1,200 jobs, according to Mark Kent of the Scotch Whisky Association.
- As the UK and India strengthen their economic bond, Brexit politics have ultimately steered India and the European Union closer, a development not to be missed in the general news.
