India and the United Kingdom conclude a post-Brexit trade agreement, in the middle of a commercial storm

India and the United Kingdom announced, on Tuesday, May 6, the conclusion of a free trade Agreement, presented by London as the most ambitious since Brexit, after negotiations relaunched at the end of February after the first commercial threats of the President of the United States, Donald Trump. British Prime Minister Keir Starmer was delighted in a press release from a “Major Agreement” For the United Kingdom, “Returned to an attractive trading partner”the Indian Prime Minister, Narendra Modi, greeting for his part on X “A historical milestone” Between the two countries.

According to the British government, this agreement with India is the most important concluded since Brexit, which has enabled the United Kingdom to regain its commercial autonomy. London will benefit from India from a gigantic market of 1.4 billion inhabitants, India being the most populous country in the world. India is also led to become “The third world economy within three years”according to the British press release.

American customs duties in abundance

Negotiations with New Delhi had been relaunched at the end of February, when transatlantic relations were already upset by the American president, Donald Trump, with threats of customs duties in abundance – which he has since been put in place.

The British also started discussions with the United States at the time, their second trading partner, in the hope of removing all or part of these taxes (10 % taxes “Converse”25 % on the automotive industry or even steel and aluminum).

In the event of success, it would however be a much less magnitude agreement that the one they dream of finalizing with Washington since their release from the EU. The United Kingdom has concluded several commercial treaties after Brexit, for example with Australia and New Zealand, and has joined the transpacific free trade partnership (CPTPP), which has 12 members like Japan and Canada.

But given the low volume of exchanges with most of these countries, these agreements have a more strategic and political scope, and the post-Brexit treaty with the EU, which the United Kingdom still intends to deepen, remains by far the most important. According to the government, the agreement with New Delhi will grow bilateral trade of 25.5 billion pounds, but will only add 4.8 billion pounds to British GDP – of around 2,800 billion.

Strong economic and cultural ties

London, which imports from India about a third more than it exports, has retained strong economic and cultural ties with its former colony-1.9 million people of Indian origin live in the United Kingdom. Trade between the two countries represent more than 40 billion pounds (47 billion euros) per year, according to the British government.

Tourist visits, but also professional or educational, as well as professional services represent a preponderant share of exchanges. The United Kingdom also exports non-ferrous metals, generators and also industrial machines to India which, in return, ships refined oil, clothing or pharmaceutical products.

The agreement provides that 85 % of Indian customs duties in the United Kingdom will be reduced to zero within ten years. Those concerning British cars will drop from more than 100 % to 10 % to a certain undefined quota. As for whiskey and gin taxes, the last stumbling block of discussions according to the British press, they will be reduced by 150 % to 75 %, then to 40 % after ten years.

This change “Could generate 1 billion additional export pounds over five years and create 1,200 jobs”evaluates Mark Kent, of the Scotch Whiskey Association, representative of the industry. British consumers should “See the prices of certain clothes, shoes or food products” lower “like frozen shrimp, it is underlined in the press release.