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FROM EMPIRE TO EXPORTS: INDIA-UK SEAL HISTORIC TRADE PACT

The Business Guardian

|

July 25, 2025

India-UK FTA slashes tariffs on 90% of UK goods and 99% of Indian exports, making most trade duty-free. Key gains: cheaper Scotch and UK cars in India; duty-free Indian textiles, rice, tea, and jewelry in the UK—marking India's boldest trade liberalization with a Western economy.

FROM EMPIRE TO EXPORTS: INDIA-UK SEAL HISTORIC TRADE PACT

The economic ties between India and the UK stretch back to the colonial era. The British East India Company, chartered in 1600, was instrumental in early trade. It traded heavily in spices, cotton textiles, silk, indigo dye, saltpeter, tea, and even opium, among other goods. By the mid-18th century, the East India Company had gained political control over large parts of India, and trade became a tool of imperial policy. Under Company rule and later the British Raj (1858-1947), India's role in the relationship was primarily as a supplier of raw materials and a market for British manufactured goods. British policies led to Indian commodities (cotton, jute, tea, etc.) being exported in massive quantities to Britain, while finished British industrial goods flooded Indian markets. This pattern enriched Britain's industrial economy but deindustrialized India - for example, by 1875 over half of Indian cloth consumption was met by imports of cheap British textiles. India's famed textile industries and artisans suffered due to high tariffs and restrictions that favored British products, transforming India from an exporter of textiles into an exporter of cotton and other raw materials. The colonial railways and canals were built largely to extract and transport these raw materials to ports for export. In essence, the pre-independence trade was one of unequal exchange: India was a source of agricultural produce and minerals for Britain and a captive market for British industrial goods, leading to a significant drain of wealth from India. By the time India gained independence in 1947, the country was impoverished and its share of global trade had plummeted. (In 1950 India accounted for only around 1.8% of world exports, a figure that would fall to just 0.5% by 1991.) This legacy of colonial trade would shape India's post-independence approach to foreign trade.

POST-INDEPENDENCE TRADE TRENDS (1947-1990)

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