India’s recent trade agreement with the United Kingdom is being seen as a strategic shift by New Delhi—easing certain trade barriers while maintaining strong protections for vital sectors. Experts and government sources suggest it could serve as a model for future negotiations.
The deal, signed on Thursday and described by Prime Minister Narendra Modi as “a blueprint for our shared prosperity”, marks one of India’s most extensive commercial alliances with a leading global economy.
The agreement arrives amid increasing global trade frictions and signals a turning point in India’s traditionally cautious trade policy, as the country moves forward with similar talks involving the European Union, the United States, and New Zealand.
As part of the arrangement, India agreed to lower import duties on British-made automobiles, opening the door to competition in a sector that represents a significant share of its GDP.
“This is a policy shift, especially as India has long used high tariffs to protect domestic manufacturers,” noted Ajay Srivastava, head of Global Trade Research Initiative and a former trade official. He added that the deal’s framework—covering public sector contracts and pharmaceutical access—may inform similar negotiations with Brussels and Washington.
Still, the changes are being introduced incrementally.
The deal places a cap on imported British vehicles through a quota mechanism, offering local manufacturers a buffer. Tariff cuts will be implemented in stages, with levies on vehicles gradually dropping from above 100% to 10% across a 15-year span. Import limits will start at 10,000 cars annually and climb to 19,000 by the fifth year.
Reductions in duties on items like whisky and other imported goods will also follow a multi-year schedule to allow domestic sectors time to adjust.
Uncompromising on Agriculture
India retained firm positions in sensitive areas, refusing to allow market access for agricultural produce like apples, walnuts, or dairy products such as cheese and whey.
“There is no question of opening up the agriculture or dairy sector in any trade negotiation — be it with the EU, Australia, or even the U.S.,” said a top-level Indian official.
The country’s strategy is to use trade liberalization to fuel economic expansion, the official explained, while continuing to defend the interests of small-scale farmers and low-income workers.
As part of the deal, Indian agricultural producers are anticipating expanded entry into the UK’s $37.5 billion food and farm product market. Meanwhile, Indian exporters are set to gain tariff-free access for a range of goods, including clothing, footwear, jewelry, furniture, machine parts, and chemical products.
“With zero tariffs, India’s garment exports to the UK could double in three years,” stated N. Thirukkumaran, general secretary of the Tiruppur Exporters Association.
“This also paves the way for the EU agreement, which could bring even bigger gains,” he added.
However, tougher negotiations are expected with U.S. President Donald Trump’s administration, which has relied on the threat of increased tariffs to extract favorable terms from trade partners.
India’s Trade Minister, Piyush Goyal, mentioned on Thursday that New Delhi remains optimistic about reaching an understanding with Washington that allows “special and preferred treatment”.
Nonetheless, the U.S. is continuing to push for more access to India’s protected agricultural and dairy sectors.
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