India-UK Trade Pact: Tariffs Slashed on Cars, Whiskey and More, Boosting Bilateral Commerce

India has announced significant tariff reductions on a range of UK-manufactured goods, including automobiles and whiskey, as part of a wide-ranging trade agreement. The pact, concluded after three years of negotiations, is poised to create favorable conditions for several businesses, notably UK firms such as Jaguar Land Rover and Diageo.

Under the terms of the free trade agreement, British companies will benefit from reduced costs when exporting a variety of products to India. This includes not only whiskey and cars but also auto parts, cosmetics, biscuits, clothing, and electrical machinery. Simultaneously, Indian exporters to the United Kingdom will see lower levies applied to 99% of their goods and services.

A notable aspect of this deal is India’s decision to open up some sectors that have historically been more protected, such as the automotive industry. This move is seen as setting a precedent for future trade negotiations currently underway, including those with the European Union and the United States.

According to a note from DBS Bank economist Radhika Rao, the trade pact could come into effect approximately a year from now. The bilateral commerce between the two nations, which stood at $21 billion in March 2024, is projected to nearly double within a few years following the agreement’s implementation.

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