The Scottish economy is to be given a boost as the UK and India have agreed a landmark trade deal which delivers on the UK government’s core mission of growing the economy, raising living standards, and putting money in people’s pockets.
Indian tariffs will be slashed, locking in reductions on 90% of tariff lines, with 85% of these becoming fully tariff-free within a decade.
Whisky and gin tariffs will be halved from 150% to 75% before reducing to 40% by year ten of the deal, while automotive tariffs will go from over 100% to 10% under a quota.
Other goods with reduced tariffs, which can open markets and make trade cheaper for businesses and Indian consumers, include cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits.
Scottish shoppers could see cheaper prices and more choice on clothes, footwear, and food products including frozen prawns as UK liberalises tariffs.
The deal is expected to increase bilateral trade by £25.5 billion, UK GDP by £4.8 billion and wages by £2.2 billion each year in the long run.
UK businesses gain a competitive edge over international competitors when entering India’s enormous market as it gets even bigger, forecasted to become the 3rd largest global economy within three years.
Business and Trade Secretary Jonathan Reynolds and Indian Commerce Minister Piyush Goyal held final talks in London last week after relaunching negotiations only two months ago. Negotiators across both sides have worked around the clock since February to get this deal done which is the biggest and most economically significant bilateral trade deal the UK has done since leaving the EU, and the best deal India has ever agreed.
Prime Minister Keir Starmer said:
“We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK’s economy, putting more money in working people’s pockets.
“Through this government’s stable and pragmatic leadership, the UK has become an attractive place to do business. Today we have agreed a landmark deal with India – one of the fastest growing economies in the world, which will grow the economy and deliver for British people and business.
“Strengthening our alliances and reducing trade barriers with economies around the world is part of our Plan for Change to deliver a stronger and more secure economy here at home.”
Business and Trade Secretary Jonathan Reynolds said:
“The UK government’s number one mission is growing the UK and Scottish economy – part of our Plan for Change so we can put more money in people’s pockets.
“By striking a new trade deal with the fastest-growing economy in the world, we are unlocking growth and delivering for Scotland’s economy and wages every year.
“In times of global uncertainty, a pragmatic approach to global trade that provides businesses and consumers with stability is more important than ever.”
Scottish Secretary Ian Murray said:
“This deal is great news for Brand Scotland, with our goods, businesses and services gaining access to what is projected to be the world’s third largest economy by 2027.
“It’s especially exciting for our world-renowned whisky industry with tariffs being slashed on Scotch exports.
“From food, drink and textiles production, to clean energy, advanced manufacturing, life sciences and financial services, Scotland has so much to offer India and the UK Government is determined to make the most of those opportunities.
“As we deliver our Plan for Change, we are also bringing inward investment to Scotland to create jobs, boost economic growth and improve living standards right across the UK.
“The Scotland Office will do everything it can to help Scottish businesses make the most of these new opportunities.”
At least 1.9 million people with Indian heritage call the UK their home and striking this deal will strengthen the vital partnership between our two democracies.
The benefits for Scottish businesses and consumers under this deal are massive, with wins across an array of sectors.
Savings for businesses of all sizes
Barriers to trading will be dropped, with India agreeing to reduce tariffs on a whole host of products including whisky, textiles, medical devices, advanced machinery, and lamb. Based on 2022 trade alone, this amounts to India cutting tariffs worth over £400 million when the deal comes into force, which will double to over £900 million after 10 years.
Exporting to this huge market will be easier than ever before thanks to India agreeing to release goods as quickly as possible after arrival at customs, work with the UK on one streamlined portal for trade and publish customs procedures and laws online in English. In addition, new digital commitments will support electronic contracts and transactions. These changes will particularly support small and medium-sized businesses, making it easier for them to enter the Indian market.
Delivering for high-growth sectors
High-growth sectors identified in the Industrial Strategy are supported through this deal, including:
- Tariffs cut for the UK’s large and varied advanced manufacturing sectors from aerospace and automotive, electrical circuits and conductors, and high-end optical products.
- The clean energy industry will have brand new, unprecedented access to India’s vast procurement market as the country makes the switch to renewable energy and continues to see growing energy demand.
- Reduced tariffs for pharmaceuticals and medical devices that take the UK’s complex supply chains into consideration will unleash new opportunities for the UK life sciences sector.
- Enhanced copyright protections for the creative sector will give exporters confidence thanks to a commitment that their work will continue to be protected for at least 60 years.
- World-class UK services sectors – who export just over £500 billion worldwide will now benefit from market certainty when trading into the growing Indian market.
More choice and protections for Scottish consumers
As bilateral trade grows under this deal, the UK will benefit from the best India has to offer with Scottish shoppers enjoying access to a greater variety of clothes, shoes and food. New commitments will also help protect consumers from spam texts from India, which could include requiring opt-out or prior consent.
Jean-Etienne Gourgues, Chairman and CEO of Whisky company Chivas Brothers, said:
“The announcement of a free trade agreement in principle between the UK and India is a welcome boost for Chivas Brothers during an uncertain global economic environment. India is the world’s biggest whisky market by volume and greater access will be a game changer for the export of our Scotch whisky brands, such as Chivas Regal and Ballantine’s.
“The deal will support long term investment and jobs in our distilleries and bottling plants in Scotland, as well as help deliver growth in both Scotland and India over the next decade.
“Slàinte to the UK ministers and officials who steered the deal though long negotiations.”
Diageo Chief Executive Debra Crew said:
“Today’s agreement is a huge achievement by Prime Ministers Modi and Starmer and Ministers Goyal and Reynolds, and all of us at Diageo toast their success.
“It will be transformational for Scotch and Scotland, while powering jobs and investment in both India and the UK.
“The deal will also increase quality and choice for discerning consumers across India, the world’s largest and most exciting whisky market.”
