The United Kingdom and India announced Tuesday that they have agreed on a free trade deal, over three years since negotiations began andthen stalled under the previous UK government.
The talks between London and New Delhi resumed in February after US tariff threats.
Britain called the deal the “biggest and most economically significant” bilateral trade agreement it has signed since leaving the European Union in 2020.
The two nations hope that, by 2040, the deal will be adding 25.5 billion pounds (€30 billion or $34 billion) a year to bilateral trade between the India and the United Kingdom. Trade between the countries totaled 42 billion pounds in 2024.
What did Modi and Starmer say about the deal?
British Prime Minister Keir Starmer hailed “a new era for trade and the economy.”
“Today we have agreed a landmark deal with India — one of the fastest growing economies in the world, which will grow the economy and deliver for British people and business,” he added.
Indian Prime Minister Narendra Modi described the deal as a “historic milestone” that will “catalyse trade, investment, growth, job creation and innovation in both our economies.”
“I look forward to welcoming PM Starmer to India soon,” he added on X. Later, Starmer’s office confirmed that the British prime minister had accepted an invitation to visit India.
What UK exporters stand to gain
India will slash tariffs on 90% of British products sold in the country, including whisky and lamb meat, but also medical equipment and goods produced by the aerospace industry.
India is one of the world’s biggest whisky markets. Tariffs on whisky and gin are to be halved from 150% to 75% before falling to 40% by the tenth year of the deal, New Delhi will also cut tariffs on cars to 10% from over 100% at present.
Other products set to see lower tariffs include British cosmetics, salmon, soft drinks, chocolate and biscuits.
No social contributions required from new Indian workers in UK
Under the latest deal, 99% of Indian exports to the UK will face zero tariffs. Notably, Britain will remove a tariff on textile imports, benefiting India’s large garment industry.
The deal will also open up export opportunities for Indian sectors such as marine products, leather, sports goods, toys, gems and jewelry, engineering goods and auto parts, India said.
The agreement will also exempt temporary Indian workers in Britain and their employers from paying social security contributions in Britain for three years.
Edited by: Darko Janjevic
