London Daily

Focus on the big picture.
Sunday, Dec 14, 2025

India plays hardball on UK trade deal as Liz Truss scrambles for a win

India plays hardball on UK trade deal as Liz Truss scrambles for a win

Services firms are worried about the rush to a UK-India deal — but a big win for Scotch whisky is in the works.

India is driving a hard bargain as Britain’s crisis-hit government tries to get a coveted trade deal over the line within weeks.

Prime Minister Liz Truss, whose fledgling administration could do with a break amid market turmoil and plunging poll ratings, has ordered her trade chief to hold fast to an October 24 Diwali deadline for the deal set by predecessor Boris Johnson and India’s Narendra Modi. But, with weeks to go in talks to secure a post-Brexit win, some crucial sectors are spooked by what’s on the table.

If the deal “doesn’t shift quite a lot,” said a senior business person briefed on the content of the talks, “it will be into the ‘a bad deal is worse than no deal’ territory.”

That’s not to say Britain’s negotiators — in daily talks with their counterparts — aren’t racking up wins. The U.K. is on the cusp of securing a cut to India’s steep, 150 percent federal tariff on Scotch whisky imports, two people familiar with the matter told POLITICO.

It would mark an early victory for an iconic industry under Trade Secretary Kemi Badenoch, who addresses the Conservative Party conference in Birmingham Monday. Her boss Truss — herself a former U.K. trade chief — has described landing a deal with India as one of her top trade priorities.

Yet, as ever with global trade talks, there’s a snag. While India is prepared to slash the federal whisky tariff as the two sides race to the end, Delhi’s negotiators are using it as leverage to get what they want from Britain.

A spokesperson for Britain’s trade department said it “cannot comment on live negotiations” but that “we are clear that we won’t sacrifice quality for speed.” The U.K. will, it stressed, “only sign when we have a deal that meets the U.K.’s interests.”

Privately, a government official acknowledged India has been “playing dirty” through a public pressure campaign to push Britain into a deal that insiders expect will focus on eliminating goods tariffs.

Even if it secures the tariff cut on Scotch, the whisky industry remains concerned that a host of bureaucratic barriers will still need to be removed to make the reduction worthwhile.

“Even if Scotch tariffs come down, there are all manner of market access barriers, particularly at state level, that will continue to be a major challenge,” said David Henig, director of U.K. trade policy at the European Centre for International Political Economy (ECIPE) think tank.

In a fresh twist last week, India threatened to slap $247 million of retaliatory tariffs on Scotch and other industries if Britain doesn’t drop controversial safeguards it put in place to protect its domestic steel industry.

While the two issues are ostensibly separate, some trade experts saw it as a well-worn hardball negotiating tactic from Delhi, with a person close to the deal saying it looked designed to give India “additional leverage” in the talks on a free trade agreement.

Truss has described landing a deal with India as one of her top trade priorities


“India did this to the U.S. a few years ago, again over steel,” they noted, saying the move is “not dissimilar” to India’s last-minute pressure tactics at the COP26 climate summit and the recent WTO negotiations over COVID-19 vaccine access.

The move shows India is “lining up more leverage to get the narrowly focused trade deal they want from us,” Henig said. Such pressure tactics are “certainly in the playbook of trade negotiations,” said another trade expert.

A person close to the Scotch whisky industry disputed the idea that the steel retaliation move was linked to the wider trade talks, saying Delhi is merely “reacting” to Britain’s move in June to shore up its steel industry.


‘Playing dirty’


As wrangling over the whisky tariffs continues, Britain’s services sector has its own doubts — and time is running out.

Several business associations — including Britain’s tech, financial services, pharmaceutical and chemical industries — went public with their concerns about the speed of talks and what the deal will offer British firms back in August.

“I have been saying for some time that I would rather we get a more comprehensive deal than rush to complete it by Diwali,” said Karan Bilimoria, Cobra beer magnate and founding chairman of the UK India Business Council.

Negotiations would “ideally” wrap up by the end of the year, Bilimoria said, leaving the door open to strike a pact that benefits Britain’s key growth sectors. But he added: “From what I am aware of, the government is working towards a deal that will be broad, comprehensive and benefits the U.K. and our businesses.”

Britain remains overwhelmingly a services-based economy: the sector generated 78 percent of total U.K. economic output from April to June this year.

Securing both the free flow of data between the countries and strong protections for intellectual property rights were key “overall objectives” for the deal set out in the U.K.’s strategic approach for talks in January.

Yet data also looks like a major roadblock to landing a deal with India that secures big wins for the U.K.’s services giants.

Britain’s deal with India “may fail to achieve meaningful access for U.K. tech, digital and financial services companies,” Kathryn Watson, an expert in trade policy at the consultancy Flint Global warned. India, she stressed “is very protectionist when it comes to data being transferred out of its region and is increasingly making it harder for companies to store data outside of its borders and operate in the country without setting up there first.”

The deal is “predominantly a fairly narrow set of tariff reductions rather than anything significant that will change the cost of doing business in India for U.K. companies,” Henig said.

Indian Prime Minister Narendra Modi


Businesspeople and experts said that the sheer volume of areas missing from the pact will now require British negotiators to bake joint committees into the deal so that outstanding issues can be hammered out in the future.

“In light of the fact not everyone’s going to get everything they want, U.K. negotiators are alert to the need to put structures in place that you can come back to [the deal] through the implementation of the agreement,” said another senior business person.

British businesses “should be skeptical that structures put in place for the future will deliver significantly and quickly,” Henig said, referring to any working groups and joint committees formed by the pact. “But they may be able to make gradual gains, particularly if the focus on the U.K. side is on implementation of deals rather than negotiation of new ones.”

Truss has given British negotiators as wide a mandate as possible to secure the deal by the Diwali deadline.

“It looks to be a goods-based deal that gives Indian companies the right to sell into the U.K. without having to have a presence in the U.K.,” said the first senior business person quoted. “Whereas what the U.K. wanted was a services and goods deal with much better establishment provisions, with at least something on digital trade and intellectual property rights.”

As it stands, there’s so little for the services sector in the deal “as to make it feel very asymmetric” in India’s favor, they added. “It’s a shame because this is a once-in-20-year opportunity and we won’t get to renegotiate it anytime soon.”

Newsletter

Related Articles

0:00
0:00
Close
UK Government Declines to Comment After ICC Prosecutor Alleges Britain Threatened to Defund Court Over Israel Arrest Warrant
Apple Shutters All Retail Stores in the United Kingdom Under New National COVID-19 Lockdown
US–UK Technology Partnership Strains as Key Trade Disagreements Emerge
UK Police Confirm No Further Action Over Allegation That Andrew Asked Bodyguard to Investigate Virginia Giuffre
Giuffre Family Expresses Deep Disappointment as UK Police Decline New Inquiry Into Andrew Mountbatten-Windsor Claims
Transatlantic Trade Ambitions Hit a Snag as UK–US Deal Faces Emerging Challenges
Ex-ICC Prosecutor Alleges UK Threatened to Withdraw Funding Over Netanyahu Arrest Warrant Bid
UK Disciplinary Tribunal Clears Carter-Ruck Lawyer of Misconduct in OneCoin Case
‘Pink Ladies’ Emerge as Prominent Face of UK Anti-Immigration Protests
Nigel Farage Says Reform UK Has Become Britain’s Largest Party as Labour Membership Falls Sharply
Google DeepMind and UK Government Launch First Automated AI Lab to Accelerate Scientific Discovery
UK Economy Falters Ahead of Budget as Growth Contracts and Confidence Wanes
Australia Approves Increased Foreign Stake in Strategic Defence Shipbuilder
Former UK Prime Minister Boris Johnson proclaims, “For Ukraine, surrendering their land would be a nightmare.”
Microsoft Challenges £2.1 Billion UK Cloud Licensing Lawsuit at Competition Tribunal
Fake Doctor in Uttar Pradesh Accused of Killing Woman After Performing YouTube-Based Surgery
Hackers Are Hiding Malware in Open-Source Tools and IDE Extensions
Traveling to USA? Homeland Security moving toward requiring foreign travelers to share social media history
UK Officials Push Back at Trump Saying European Leaders ‘Talk Too Much’ About Ukraine
UK Warns of Escalating Cyber Assault Linked to Putin’s State-Backed Operations
UK Consumer Spending Falters in November as Households Hold Back Ahead of Budget
UK Orders Fresh Review of Prince Harry’s Security Status After Formal Request
U.S. Authorises Nvidia to Sell H200 AI Chips to China Under Security Controls
Trump in Direct Assault: European Leaders Are Weak, Immigration a Disaster. Russia Is Strong and Big — and Will Win
"App recommendation" or disguised advertisement? ChatGPT Premium users are furious
"The Great Filtering": Australia Blocks Hundreds of Thousands of Minors From Social Networks
Mark Zuckerberg Pulls Back From Metaverse After $70 Billion Loss as Meta Shifts Priorities to AI
Nvidia CEO Says U.S. Data-Center Builds Take Years while China ‘Builds a Hospital in a Weekend’
Indian Airports in Turmoil as IndiGo Cancels Over a Thousand Flights, Stranding Thousands
Hollywood Industry on Edge as Netflix Secures Near-$60 Bln Loan for Warner Bros Takeover
Drugs and Assassinations: The Connection Between the Italian Mafia and Football Ultras
Hollywood megadeal: Netflix acquires Warner Bros. Discovery for 83 billion dollars
The Disregard for a Europe ‘in Danger of Erasure,’ the Shift Toward Russia: Trump’s Strategic Policy Document
Two and a Half Weeks After the Major Outage: A Cloudflare Malfunction Brings Down Multiple Sites
UK data-regulator demands urgent clarity on racial bias in police facial-recognition systems
Labour Uses Biscuits to Explain UK Debt — MPs Lean Into Social Media to Reach New Audiences
German President Lays Wreath at Coventry as UK-Germany Reaffirm Unity Against Russia’s Threat
UK Inquiry Finds Putin ‘Morally Responsible’ for 2018 Novichok Death — London Imposes Broad Sanctions on GRU
India backs down on plan to mandate government “Sanchar Saathi” app on all smartphones
King Charles Welcomes German President Steinmeier to UK in First State Visit by Berlin in 27 Years
UK Plans Major Cutback to Jury Trials as Crown Court Backlog Nears 80,000
UK Government to Significantly Limit Jury Trials in England and Wales
U.S. and U.K. Seal Drug-Pricing Deal: Britain Agrees to Pay More, U.S. Lifts Tariffs
UK Postpones Decision Yet Again on China’s Proposed Mega-Embassy in London
Head of UK Budget Watchdog Resigns After Premature Leak of Reeves’ Budget Report
Car-sharing giant Zipcar to exit UK market by end of 2025
Reports of Widespread Drone Deployment Raise Privacy and Security Questions in the UK
UK Signals Security Concerns Over China While Pursuing Stronger Trade Links
Google warns of AI “irrationality” just as Gemini 3 launch rattles markets
Top Consultancies Freeze Starting Salaries as AI Threatens ‘Pyramid’ Model
×