The India-UK trade agreement indicates Modi's priorities as New Delhi Eyes EU, Pacts EE. UU.

The commercial agreement of India with Great Britain is a sign of the new gradual change of New Delhi to open its markets while protecting the crucial sectors of the competition and could be its workforce for future agreements, government officials and analysts said on Friday.

Signed on Thursday and acclaimed by Prime Minister Narendra Modi as “a plan for our shared prosperity”, the agreement with the United Kingdom represents the largest strategic association in India with an advanced economy.

It arrives at the same time to the increase in world commercial tensions and at a crucial moment for the historically protectionist commercial strategy of India, since the Asian giant seeks to reach similar agreements with partners, including the EU, USA and New Zealand.

According to the pact, India remarkably agreed to reduce tariffs to imported British vehicles, opening competition for a national industry that represents almost 7% of the Indian economy.

“This is a policy change, especially because India has long used high rates to protect national manufacturers,” Ajay Srivastava, founder of Global Trade Research Initiative and former Indian commercial negotiator, told Reuters.

The flexibility of its protectionist position also applies to government hiring and pharmaceutical products and will probably be replicated in the agreements with Brussels and Washington, he added. But it is still a cautious change.

The calibrated strategy aims to take advantage of trade for economic growth, the official said, but the government will continue to protect millions of Indians who depend on subsistence agriculture and low margin work.

Indian exporters will benefit from zero tariffs on products that include textiles, footwear, gems, furniture, auto parts, machinery and chemicals. “With zero tariffs, exports of india clothing to the United Kingdom could double in three years,” said N. Thirukkumran, general secretary of the Association of Exporters of Tippur. “This also paves the way for the EU agreement, which could generate even greater profits.”

But the strategy could face an important evidence in negotiations with the administration of the president of the United States, Donald Trump, who has used the threat of pronounced tariffs to press the commercial partners to make concessions.

The Minister of Commerce, Piyush, Goyal, told Reuters on Thursday that India also hopes to reach a commercial agreement with Washington that includes “special and preferred treatment.”