When UK Prime Minister Keir Starmer met Narendra Modi in Mumbai on Thursday, the long-negotiated India–U.K. trade pact finally crystallized with additional features, expanding access for a wider range of Indian exports and including special provisions for MSMEs. Nearly 99 percent of exports to Britain will now face zero duty, and small exporters in textiles, leather, gems and jewellery, and marine products are set to benefit from smoother market access and regulatory support. Yet, for all its promise, this agreement remains a hedge, not a shield, especially as India braces for the full brunt of the U.S.’s 50 percent tariff regime. Britain’s market, however affluent, is small compared to the U.S., and no amount of tariff relief from London can compensate for massive export losses across the Atlantic. For India’s MSMEs, the pact offers welcome relief. Government projections suggest gems and jewellery exports could double within three years, while textiles, leather, and marine products gain critical price competitiveness. The dedicated MSME chapter promises reduced trade barriers, clearer regulations, and easier access to market information. But the gains are modest. The U.K.’s consumption base cannot absorb large-scale export surges, and non-tariff barriers—standards, certifications, and regulatory friction—remain. MSMEs may benefit incrementally, but the deal is no panacea for structural limitations in logistics, finance, and scale. The real threat comes from Washington. Under Trump’s trade blitz, India faces 50 percent tariffs on $48.2 billion worth of exports. Labour-intensive sectors like textiles, carpets, shrimp, gems, and auto components could see volumes collapse by 70 percent.
Analysts warn this could shave a full percentage point off India’s GDP growth, while the World Bank projects South Asia’s growth slowing from 6.6 to 5.8 percent next year. And yet, Trump continues to boast—this time for the 55th or 56th time—that his “100 percent trade tariffs helped India stop war against Pakistan.” Such claims reveal political theatre, not trade strategy. Tariffs do not broker peace; they devastate economies. While the U.S. weaponizes tariffs, Europe quietly recalibrates. Over-reliance on China and supply-chain vulnerabilities have turned the continent toward India. Britain, post-Brexit, sees scale, skilled labour, and political reliability. The pact is not just trade—it is Europe hedging against uncertainty, diversifying supply chains, and securing a reliable alternative to both China and America’s unpredictability. India’s emerging strategic weight allows it to leverage this attention. As European nations move decisively, the U.S. risks isolation by continuing aggressive tariff policies that alienate its traditional partners. The India–U.K. pact is smart, necessary, and forward-looking. It provides MSMEs with breathing space, signals India’s global openness, and strengthens strategic ties. The damage from U.S. tariffs will dwarf gains from Britain. Trump’s claim that tariffs “end conflicts” is absurd and dangerous. While the U.S. pursues protectionism, India is positioning itself as a reliable, stable partner, and Europe is taking notice. The lesson is clear: in global trade, credibility, stability, and strategic autonomy matter more than bluster and coercion.
