How the UK-India Free Trade Deal Cuts Supply Chain Costs

The United Kingdom and India have signed a landmark Free Trade Agreement that will cut costs, boost exports and unlock access to one of the world's fastest-growing markets.

The UK Government estimates this deal will increase bilateral trade by £25.5bn (US$34bn), add £4.8bn (US$6.4bn) annually to the UK economy and raise wages by £2.2bn (US$2.9bn) each year in the long run. The agreement gives UK businesses a head start in a country projected to become the world’s third-largest economy within three years.

“The core mission of this Government is to deliver economic growth that raises living standards and puts money in people’s pockets, and that is exactly what this deal will do,” the Government states. “This is the best deal India has ever agreed to.”

A boost for high-growth and service sectors

The agreement delivers immediate tariff reductions on key British exports including whisky, gin, cosmetics, medical devices, machinery and lamb.

Tariff cuts alone will save UK exporters £400m (US$534.7m) in the first year, rising to £900m (US$1.2bn) after 10 years, before factoring in gains from streamlined customs processes and digital trade commitments.

For consumers, this will mean greater access to Indian goods and food, as well as protection from spam marketing through stricter regulations.

Among the UK businesses set to benefit is Chivas Brothers Ltd, which exports more than £2bn (US$2.6bn) of whisky and gin annually. India is its largest export market by volume.

Jean-Etienne Gourgues, Chairman and CEO, says the deal is “a welcome boost” that will be “a game changer for the export of our Scotch whisky brands." 

Meanwhile, Diageo sees the deal as “transformational”, with CEO Debra Crew calling it a boost “for Scotch and Scotland, while powering jobs and investment in both India and the UK."

Ewan Andrew, President for Global Supply & Procurement at Diageo also summed up the mood on LinkedIn: “Terrific news on the UK and India Free Trade deal just announced. 

“Many congratulations to everyone who played a role over many many years and to those in role now who finally got the agreement in place. This will be brilliantly received news and is a welcome boost (in particular) for the Scotch Whisky industry across every part of Scotland and in India.”

The agreement supports high-growth sectors identified in the UK’s Industrial Strategy, whilst advanced manufacturing will benefit from slashed tariffs on automotive components, electrical machinery and precision optical goods.

The life sciences sector also gains reduced tariffs on medical devices, as well as rules of origin allowances for complex supply chains.

Opening procurement and cementing strategic ties

For the first time, UK companies will gain access to India's vast government procurement market, valued at £38bn (US$50.7bn) a year.

Under the deal, UK firms with at least 20% of production in the UK will qualify as ‘Class Two local suppliers’, giving them the same preferential treatment as Indian companies under the ‘Make in India’ initiative.

Engineering consultancy Arup, which has delivered major projects in India, sees the agreement as deepening collaboration on infrastructure and clean energy.

Paula Walsh, Managing Director for the UK, India, Middle East and Africa, says it is “an important opportunity to deepen our collaboration with partners in India." 

Meanwhile, UPS Managing Director Markus Kessler says: “We look forward to continuing to help businesses of all sizes across the UK reach new customers in one of the world’s most populous and dynamic countries.”

The wide range of case studies, from logistics provider UPS to diagnostics firm Biopanda, illustrates how businesses large and small are prepared to seize the opportunities on offer.

The agreement is also underpinned by shared democratic values and cultural ties. It includes India’s first-ever commitments on labour rights, gender equality, anti-corruption and environmental protections. 

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