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UK and India clinch major trade deal

UK and India clinch major trade deal

Britain's secretary of state for business and trade Jonathan Reynolds meets Indian minister of commerce and industry Piyush Goyal for trade talks, in London, Britain, April 28, 2025.

Photo: Department for Business and Trade via REUTERS

Britain on Tuesday struck a free trade agreement with India, its biggest such deal since leaving the European Union, after negotiations relaunched in February following US tariff threats.

Britain has sought to bolster trade ties across the world since it left the EU at the start of the decade under Brexit, a need that became more pressing after the United States unleashed tariffs that risk causing weaker economic growth.


"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," prime minister Keir Starmer said in a statement.

His Labour government said it is "the biggest and most economically significant bilateral trade deal the UK has done since leaving the EU".

India's prime minister Narendra Modi described the deal as "ambitious and mutually" beneficial.

The pact will help "catalyse trade, investment, growth, job creation, and innovation in both our economies", Modi said in a post on social media platform X.

His office said in a statement that the deal will "unlock new potential for the two nations to jointly develop products and services for global markets".

It added that Modi had invited Starmer to visit India at an unspecified date.

Whisky and shoes

India, which has some of the world's highest tariffs on imports, will slash levies on 90 per cent of British products sold in the country, from whisky and medical devices to machinery and lamb, with 85 per cent of those becoming tariff-free within a decade.

Whisky and gin tariffs will be halved from 150 per cent to 75 per cent, before falling to 40 per cent by the tenth year of the deal, benefiting Britain's Scotch whisky industry and making the beverage cheaper in the world's largest whisky market.

India will also cut automotive tariffs to 10 per cent from over 100 per cent currently.

Other British goods which will face lower tariffs include cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits.

Based on 2022 data, India's tariff cuts will amount to over £400 million, which are expected to more than double after 10 years.

Britain has also agreed to reduce its own tariffs on some products, which were relatively lower than India's, leaving 99% of Indian exports to Britain facing zero duties.

Britain will remove a tariff on textile imports from India, benefiting India's large apparel industry, which employs millions of workers.

The deal will open up export opportunities for Indian sectors such as marine products, leather, sports goods, toys, gems and jewellery, engineering goods and auto parts, India said.

The deal comes after US president Donald Trump hiked tariffs on trading partners and launched sector-specific levies on steel, aluminium and cars.

The UK and India are the sixth and fifth largest global economies respectively, with a trade relationship worth around £41 billion and investment supporting more than 600,000 jobs across both countries.

The sides hope the free-trade agreement will increase trade between the two countries by £25.5 billion, as well as boosting the British economy and wages.

The UK called it "the best deal India has ever agreed".

Talks were relaunched between the two countries in February after stalling under Britain's previous Conservative administrations.

In previous negotiations, India pushed for more UK work and study visas for its citizens in exchange for lowering tariffs.

The Federation of Indian Export Organisations welcomed Tuesday's announcement, saying that the deal "eliminates or significantly reduces tariffs on a wide range of Indian goods, giving our exporters preferential access to one of the world's most affluent and consumption-driven markets".

Mike Hawes, chief executive of British automotive lobby group SMMT also praised the outcome.

"While the agreement will likely feature compromises, and might not offer unfettered market access to all UK automotive goods, we appreciate the considerable effort British negotiators have devoted to secure the first partial liberalisation of the Indian automotive market."

The deal also contains a so-called double contribution convention, which will exempt temporary Indian workers in Britain and their employers from making social security contributions in Britain for three years.

The social security deal - hailed by India as a "huge win" - was one of three deals which were being negotiated in addition to agreements on trade and investment.

UK trade deals

Britain has secured other trade deals since exiting the EU, including with Australia, New Zealand and Singapore.

However, a much sought-after agreement with the United States remains elusive.

The European Union remains Britain's biggest trading partner, and Starmer has sought to bring the UK and the EU closer together since his Labour party won re-election last July.

A landmark EU-UK summit is due this month, but Starmer has ruled out Britain rejoining the neighbouring bloc.

Britain joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in December.

The CPTPP alliance comprises fellow G7 members Canada and Japan, plus long-standing allies Australia and New Zealand, alongside Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam.