In a major post-Brexit breakthrough, the United Kingdom and India have finalized a landmark free trade agreement projected to inject £4.8 billion annually into the British economy by 2040. After more than three years of complex negotiations spanning multiple UK administrations, the deal was confirmed on Tuesday, delivering long-awaited tariff reductions and expanded trade access for both nations.
UK Prime Minister Keir Starmer hailed the pact as a pivotal economic milestone. “This landmark deal with India will grow the economy and deliver for British people and business,” Starmer stated following a call with Indian Prime Minister Narendra Modi. Modi echoed the sentiment in a social media post, declaring the agreement “ambitious and mutually beneficial,” and expressed his eagerness to welcome Starmer to India for an official signing in the coming months.
The agreement brings substantial benefits to key British industries hurt by ongoing U.S. tariffs under President Donald Trump. India will halve its 150 percent import duty on British whisky and gin, dropping it to 75 percent initially and further reducing it to 40 percent over the next decade. Car tariffs will fall from 100 percent to 10 percent, although exports will be subject to quotas. Tariff cuts across 90 percent of UK product lines—including cosmetics, salmon, lamb, soft drinks, and aerospace parts—are estimated to be worth £400 million based on 2022 trade volumes.
India also secured tariff relief on exports of textiles, food items, and footwear to the UK. British consumers are expected to benefit from a wider range of affordable products as a result. Although talks on a bilateral investment treaty and carbon tax exemptions remain ongoing, negotiators confirmed that no changes to immigration policy are included. However, temporary workers in both countries will be exempt from paying national insurance contributions for up to three years—a key concession sought by India.
Jonathan Reynolds, the UK’s Business and Trade Secretary, led the final round of talks with Indian Commerce Minister Piyush Goyal, working through the weekend to resolve remaining issues. “By striking a new trade deal with the fastest-growing economy in the world, we are delivering billions for the UK economy and wages every year,” Reynolds said. “In times of global uncertainty, a pragmatic approach to global trade is more important than ever.”
The agreement, which builds on previously negotiated chapters under former Conservative leaders, is the most comprehensive deal India has signed to date. It aims to increase bilateral trade by £25.5 billion by 2040 and includes commitments to gender equality, anti-corruption efforts, and environmental and labor standards.
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