UK Strikes Landmark Trade Deal With India
- Sarah-Jayne Gratton
- May 7
- 3 min read
A landmark trade agreement between the UK and India is set to unlock major opportunities for British exporters, including producers of whisky, cars, gin, salmon, and sweet treats. The deal, which took three years to negotiate, will also ease tariffs on Indian clothing and footwear entering the UK.
Announced this week, the bilateral agreement is being hailed as the most significant trade pact the UK has signed since leaving the EU. It promises to boost UK–India trade by £25.5 billion annually by 2040, building on an existing £42.6 billion trading relationship.
Prime Minister Sir Keir Starmer welcomed the deal, saying it would “deliver for British people and business” and help grow the economy. Indian Prime Minister Narendra Modi echoed the sentiment, calling the agreement a “historic milestone” that would drive “growth, job creation and innovation”.
Export Wins For UK Producers
The agreement is a notable win for UK food and drink exporters. Tariffs on British gin and whisky—previously a sticking point—will be halved from 150% to 75%, with further reductions expected in the future. High-value UK-made cars, which have faced 100% tariffs, will see duties fall to 10%, albeit with a cap on export volumes.
Other British products to benefit from reduced tariffs include:
Lamb, salmon, and other foodstuffs
Chocolates and biscuits
Aerospace and medical devices
Electrical goods and cosmetics
UK Business Secretary Jonathan Reynolds described the deal as delivering “massive” benefits, while the Department for Business and Trade highlighted the growth potential for companies expanding into India’s fast-growing consumer market.
Lower Prices For UK Consumers
British consumers are also expected to see price drops on a range of Indian imports. Tariffs will be cut on goods including:
Clothing and footwear
Cars
Jewellery and gemstones
Food items such as frozen prawns
Services, Procurement And Workforce Mobility
The agreement also includes provisions to enhance market access for services and public procurement, allowing British firms to bid for more Indian government contracts.
A key element of the deal is a three-year exemption from social security payments for some workers temporarily transferred between the two countries. The exemption—hailed by the Indian government as “unprecedented”—applies to staff sent abroad by UK and Indian firms, with contributions required only in their home country.
The UK already has similar arrangements with 17 countries, including the US and EU member states.
Political Reactions And Criticism
Despite the broad praise, the agreement has drawn criticism from opposition parties. Conservative trade spokesman Andrew Griffith accused Labour of negotiating a deal where “Britain loses”, while Liberal Democrat deputy leader Daisy Cooper raised concerns over Indian workers potentially bypassing tax contributions, and called for parliamentary scrutiny.
The government insisted that NHS funding would remain unaffected, as Indian workers in the UK would still be subject to the immigration health surcharge.
Strategic Significance
India is currently the world’s fifth-largest economy and is projected to overtake Japan and Germany to reach third place in the coming years. For the UK—currently the sixth-largest economy—strengthening ties with India aligns with broader goals to deepen trade partnerships post-Brexit.
Prime Minister Modi’s government is also pushing hard to expand India’s exports to $1 trillion by 2030, making the UK a key priority market.
Business leaders have welcomed the agreement. Rain Newton-Smith, CEO of the CBI, said the deal was a “beacon of hope amidst the spectre of protectionism” and offered “myriad” opportunities for UK firms in the Indian market. Allie Renison of SEC Newgate described it as potentially “transformational”, given the size and complexity of the Indian economy.
The deal is expected to come into effect within a year, following ratification processes in both countries.
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