The US-UK trade deal serves as a warning for India: GTRI

The limited trade agreement between the US and the UK has raised concerns among Indian trade experts, who see the pact as a potential template for a “mini deal” Washington may push New Delhi to sign.

The deal, announced on 8 May, appears to be heavily tilted in the US’s favour, with London granting sweeping market access in return for relatively modest tariff cuts—a lopsided outcome that Indian negotiators should avoid, said a brief report by the Global Trade Research Initiative (GTRI) released on Saturday.

The trade policy think tank cautioned that India may soon come under similar pressure to finalise a narrowly focused trade package with the US, centred on tariff cuts, strategic market openings, and large-value commercial deals, rather than a broader free trade agreement (FTA) that would require Congressional approval.

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The UK deal, according to the GTRI, reflects the Trump administration’s preferred style: limited, transactional arrangements that deliver quick wins without the legislative complexity of a full-fledged FTA.

Under the US-UK pact, Washington has agreed to reduce tariffs on several British exports, including lowering the 27.5% duty on cars to 10% for up to 100,000 vehicles annually, matching the UK’s current export volume to the US.

Tariffs under Section 232 on UK steel and aluminium have been scrapped entirely, and duties on aerospace components like Rolls-Royce jet engines have also been lifted.

However, the UK’s tariff concessions go far deeper. London has agreed to abolish tariffs on 1.4 billion litres of American ethanol, eliminate a 20% duty on US beef within quotas, and cut tariffs on over 2,500 US products, including olive oil, wine, and sports goods, from an average of 5.1% to 1.8%.

The agreement’s commercial significance has been amplified by a $10 billion Boeing aircraft order placed by a British airline, which is viewed as part of the broader trade understanding. Both sides have also committed to future discussions on digital trade and pharmaceutical tariffs—areas that could resurface in India’s own bilateral conversations with the US, it said.

For India, the implications are immediate and potentially far-reaching. The government has been engaged in off-and-on trade discussions with Washington for over five years, with negotiations gaining momentum under the Trump administration’s renewed push for reciprocal tariff deals. A US-India announcement, perhaps modelled on the UK deal, may now be imminent. 

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But the GTRI report warned that if India mirrors the UK’s approach, it could end up granting sweeping concessions without securing equivalent gains.

India may be asked to significantly reduce tariffs on a list of US agricultural products, including soybeans, ethanol, almonds, apples, walnuts, raisins, avocados, poultry, and meat—many of which are politically sensitive due to their impact on Indian farmers, according to the GTRI report.

It said concessions on automobiles are also likely, especially after India recently agreed to cut tariffs on select UK vehicles from 100% to 10% under its FTA with Britain.

The US is also expected to demand large-value purchases, possibly of oil and LNG, Boeing aircraft, helicopters, or even nuclear reactors, alongside policy concessions. These may include easing foreign direct investment (FDI) rules for multi-brand retail, relaxing licensing on remanufactured goods, and opening up sectors like insurance, digital media, and satellite-based internet, it said. 

Market access for services like Starlink and a reduction in data localisation requirements may also be part of the US wish list, it added.

The real concern, according to the report, is the imbalance. “The UK has agreed to cut tariffs on more than 2,500 American products, while the US has reciprocated on fewer than 100 items, and even then, only partially. This is not reciprocity—it’s a warning sign,” said Ajay Srivastava, co-founder of the GTRI.

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India, he added, must draw red lines, particularly on agriculture. “A flood of subsidised US farm imports would directly hit millions of Indian farmers. No trade deal should come at the cost of India’s rural economy or its regulatory sovereignty.”

Mint reported on 21 April that Indian negotiators have made it clear that unless the US changes its animal feeding practices—specifically the use of non-vegetarian feed for cattle—or adopts India’s vegetarian certification process, there will be no question of letting in American dairy products such as cheese and butter.

In 2024, US exports of agricultural and allied products to India reached nearly $2 billion, with $452 million from alcoholic beverages and $1.3 billion from fruits and vegetables. Meanwhile, India's exports to the US were around $5.5 billion.