The United Kingdom and India have concluded a comprehensive free trade agreement (FTA), hailed as the UK’s most significant trade deal since its departure from the European Union. Announced on May 6, 2025, by Prime Minister Keir Starmer and Indian Prime Minister Narendra Modi, the agreement is projected to enhance bilateral trade by £25.5 billion annually by 2040 and boost the UK economy by £4.8 billion per year.
Key Provisions of the Agreement:
- Tariff Reductions:
India will significantly reduce tariffs on British exports. Notably, duties on Scotch whisky and gin will decrease from 150% to 40% over ten years, and car tariffs will drop from 100% to 10% under a quota system. - Market Access:
The deal grants UK businesses greater access to Indian markets, including public procurement contracts and service sectors. It also simplifies customs procedures and includes provisions on anti-corruption, environmental, and labor standards. - Worker Mobility:
The agreement facilitates visa access for Indian professionals to the UK without altering existing immigration policies. Additionally, Indian workers in the UK will be exempt from national insurance payments. - Consumer Benefits:
UK consumers can expect lower prices on imported Indian goods such as clothing, footwear, and food products due to reduced tariffs.
Prime Minister Starmer emphasized the strategic importance of the deal, stating, “This agreement marks a new era of UK-India relations, fostering economic growth and strengthening our global partnerships.”
The Scotch Whisky Association lauded the agreement, projecting a £1 billion increase in exports to India over five years and the creation of approximately 1,200 UK jobs.
Negotiations for the FTA commenced in January 2022 but faced delays due to political changes in both countries. The Labour Party’s election victory in July 2024 expedited the process, leading to the agreement’s conclusion in early 2025.
