Both sides celebrate the landmark agreement, which was several years in the making.
India and the United Kingdom have agreed to a trade deal that comes after three years of negotiations and that they say will boost their economies amid the fallout from US President Donald Trump’s tariffs.
The British government said on Tuesday that the deal “is expected to increase bilateral trade by 25.5 billion pounds [$34bn], UK GDP by 4.8 billion pounds [$6.4bn] and wages by 2.2 billion pounds [$2.9bn] each year in the long run”.
“Indian tariffs will be slashed, locking in reductions on 90 percent of tariff lines, with 85 percent of these becoming fully tariff-free within a decade.”
The British alcohol and car industries are some of the main beneficiaries, with tariffs on whisky and gin getting halved to 75 percent before reducing to 40 percent by year 10 of the deal. Automotive tariffs will go from over 100 percent to 10 percent under a quota.
Tariffs will also be reduced on British exports including cosmetics, medical devices, aerospace parts, lamb, salmon, chocolate, and biscuits.
India’s Trade Ministry said 99 percent of Indian exports would face no import duty under the deal.
“This brings us closer to our goal of becoming a global economic powerhouse. It protects our core interests while opening doors to India’s greater participation in global value chains,” Trade Minister Piyush Goyal said.
The deal introduces a “Double Contribution Convention” that exempts Indian workers in the UK from national insurance payments for up to three years, and vice versa.
Advanced negotiations on a separate bilateral investment treaty and further discussions on labour and environmental standards are ongoing as well.
India’s Prime Minister Narendra Modi and his British counterpart Keir Starmer spoke on the phone on Tuesday to mark the agreement, and Modi invited Starmer to visit the country.
“These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies,” Modi said in a post on X.
“Strengthening our alliances and reducing trade barriers with economies around the world is part of our Plan for Change to deliver a stronger and more secure economy here at home,” said Starmer, hailing what the government says is the UK’s largest trade agreement since leaving the European Union in 2020.
The two leaders are expected to meet in the coming months to sign and finalise the deal.
India also sought to receive an exemption from the UK’s forthcoming carbon tax – a climate policy tool set to be implemented from 2027 – but officials did not elaborate on the details in their statements on Tuesday.
The deal comes as countries around the world are pondering new strategies and negotiating trade deals to make up for the costs of tariffs imposed by the Trump administration in the United States.
