UK India trade deal: Is Keir Starmer's deal a good one for the UK and Scotland?

The trade deal was announced late on Tuesday evening

The UK has secured a new trade deal with India, but the response has not been completely positive.

As details began to emerge, both Reform and Tory MPs began taking issue with aspects of the deal. Criticism was specifically the agreement would allow some Indian workers transferred to Britain to temporarily avoid paying social security in this country and vice versa.

Chancellor of the Exchequer Rachel Reeves holding a whisky glass during a visit to the Glenkinchie Whisky Distillery in Tranent, East Lothian to mark the UK-India trade deal. Picture: Andrew Milligan/PA Wire | Andrew Milligan/PA Wire

Opponents claim the deal creates a “two-tier” tax system, a phrase increasingly used by the right. And coming so soon after Reform’s success in the local elections, this element has also irritated some Labour MPs, who called it “tone deaf”.

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The Labour government position

However, those in government totally reject this argument, pointing out these exemptions are not for all workers, and also exist in trade arrangements with 50 other countries as well. Sir Keir Starmer dismissed opposition criticism of tax exemptions in the UK-India trade deal as “incoherent nonsense” as he insisted the agreement was a “huge win” for Britons.

There is also a view held more widely by Labour MPs the arrangement is a shining example of the UK government making Brexit work. They accuse the Tories of failing to deliver any of the so-called Brexit dividends, and believe trade deals like this are fundamental to mitigating some elements of Britain’s European exit.

As one Labour MP told The Scotsman: “We’ve negotiated a deal that’s going to boost business and shows the global Britain they went on about in the referendum. They’re in no position to criticise, especially when we make a deal that’s going to transform things for UK business.”

Do your homework and you won't lose massive capital sums on whisky casks (Picture: Adobe)

Transformation?

This possibility of transformation may sound like hyperbole, but is not impossible, and also the language used by the Scotch Whisky Association.

Whisky producers now face the prospect of selling to the biggest country in the world by population, with Indian tariffs on whisky going from 150 per cent to 75 per cent, before being reduced to 40 per cent by the tenth year of the deal. Numerous MPs said the deal was good for Scotland, to The Scotsman, explaining Scotch whisky producers were doing no business in India and now have an entirely new market to break into.

What the deal does for whisky

It is also the first reduction of its kind for whisky exports – with a recent trade deal between India and Japan not resulting in lower tariffs for the spirit, despite Japan being a key producer.

The reaction from MPs outside the Labour party is also telling. While Conservatives leader Kemi Badenoch has been critical online, she barely touched on the issue at Prime Minister’s Questions on Wednesday.

The deal has also been praised by the Lib Dems, with Jamie Stone saying he was “delighted” by it, claiming the agreement brought “welcome stability” and that it created an opportunity for jobs and investment.

This is the key to gauging the politics of the deal. While there is no doubt some on the right will criticise the agrement based on the exemptions, business has welcomed it, as have opposition MPs whose constituencies produce whisky.

A lack of impact assessment can seem damning, but how do you forecast the growth of industry? It is a deal that can create jobs and boost business, and one Labour hopes can boost their fortunes and the public purse long term.