India-UK Trade Pact Poses New Challenges for US, Japan Exporters

New Delhi, July 24 —

India’s newly inked free trade agreement with the United Kingdom is poised to reshape trade flows and intensify global competition. While the deal promises cost savings for Indian consumers, it may undercut exporters from the US, Japan, and several other nations.

Tariff Reductions Could Tilt Market Dynamics

The agreement, ratified ahead of Prime Minister Narendra Modi’s two-day UK visit, will gradually reduce tariffs on 85% of UK exports to India. This strategic shift enables British firms to gain an edge in the Indian market over other traditional suppliers.

US Exports Worth $1.24 Billion Under Pressure

American shipments to India valued at $39 billion in 2024 could face disruptions in over $1.2 billion worth of exports. Goods like copper scrap, industrial equipment, and medical devices are particularly vulnerable to cheaper UK alternatives due to the tariff cuts.

Japan, EU Also Face Limited Risk

Japan may see about 2.2% of its Indian exports challenged, while the European Union, Australia, and Canada are expected to experience smaller but notable impacts. These countries now face growing competition in sectors where UK exporters may gain momentum.

Strategic Win for India and the UK

For India, the deal unlocks greater access to advanced technology and industrial goods, while the UK anticipates a $15.7 billion export boost by 2040. The agreement also strengthens India’s foothold in global value chains, especially in sectors like apparel, footwear, and spices posing fresh challenges to competitors in South and Southeast Asia.