- Friday, May 23, 2025
The accord will slash tariffs on imports of UK goods into India, including whisky, cosmetics and medical devices.
By: India Weekly
BRITAIN on Tuesday struck a free trade agreement with India, its biggest such deal since leaving the European Union, as it sought to bolster trade ties across the world under Brexit.
The deal was arrived at after negotiations were relaunched in February following US tariff threats.
US President Donald Trump hiked tariffs on trading partners and launched sector-specific levies on steel, aluminium and cars.
“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,” UK 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”.
Government figures project the value of the agreement to add £4.8 billion to growth each year by 2040, which is 0.1 per cent of GDP.
India’s Prime Minister Narendra Modi described the deal as “ambitious and mutually” beneficial.
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.
It marks India opening up its long-guarded markets, including automobiles, setting an early example for the South Asian nation’s likely approach to dealing with major Western powers such as the US and the European Union.
Whisky and shoes
The accord will slash tariffs on imports of UK goods into India, including whisky, cosmetics and medical devices.
Whisky and gin tariffs will be halved to 75 per cent, while automotive tariffs will be slashed from more than 100 per cent to 10 per cent.
In exchange, the UK will cut tariffs on imports of clothes, footwear and food products, including frozen prawns, from India.
The UK and India are the sixth and fifth largest global economies respectively, with a trade relationship worth around $54.8 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”.
Long-drawn talks
Talks over a free trade deal between India and Britain were initially launched in January 2022, and became a symbol of Britain’s hopes for its independent trade policy after Brexit.
But negotiations were stop-start, with Britain having four different prime ministers since that launch date and elections in both countries last year.
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.”
