The UK has finalised a significant trade agreement with India that is set to boost the UK economy by £4.8 billion.
India, the world’s fifth-largest economy, seeks to expand bilateral trade with the UK, the world’s sixth-largest, by a further $34 billion by 2040.
The agreement, announced yesterday by Business and Trade Secretary Jonathan Reynolds, comes after intensive negotiations that were relaunched just two months ago under the Labour government’s new “Plan for Change” economic strategy.
Under the terms agreed, India will slash tariffs on 90% of tariff lines for UK exports, with 85% becoming fully tariff-free within a decade. Among the most notable reductions, duties on British whisky and gin will be halved from 150% to 75% initially, before declining to 40% over ten years.
Automotive tariffs, previously exceeding 100%, will drop to 10% under a quota system. Other sectors benefiting from reduced tariffs include cosmetics, aerospace, food and drink, and medical devices.
Prime Minister Sir Keir Starmer described the agreement as part of “a new era for trade and the economy”, adding that it demonstrates “the UK has become an attractive place to do business” under his government’s “stable and pragmatic leadership”.
India’s growth trajectory has been marked by resilience and robust expansion. According to the IMF, it is forecast to become the world’s third-largest economy within three years and intends to reach $1 trillion in merchandise exports by 2030. By both manufacturing and service indicators, India has been growing at record highs in terms of historic export growth.
The deal includes chapters on anti-corruption, consumer protections, labour rights and gender equality: India’s first commitments in these areas in a trade agreement.
Approximately 150 years ago, the British East India Company forced extractive and deliberately unfair trade conditions on the Indian subcontinent, essentially monopolising its exports as part of its colonial ambition. This free trade agreement marks an entirely new chapter in UK-India relations, to the benefit of the 1.9 million people with Indian heritage who call the UK their home, and with externalities across the world.
