India and the United Kingdom have reached a wide-ranging trade agreement following three years of negotiations, in a deal both countries say will significantly boost bilateral trade and support economic recovery amid shifting global trade dynamics, Al Jazeera reports.
Announced on Tuesday, the agreement is projected to increase annual bilateral trade by £25.5 billion ($34 billion), while adding £4.8 billion ($6.4 billion) to the UK’s GDP and raising wages by £2.2 billion ($2.9 billion) in the long term, according to the British government.
Under the deal, tariffs on 90 percent of goods traded between the two countries will be reduced, with 85 percent of those becoming fully tariff-free within 10 years. The agreement marks the UK’s largest trade pact since it exited the European Union in 2020.
Key UK sectors such as alcohol and automotive manufacturing are set to benefit significantly. Tariffs on products like whisky and gin will be halved from their current rate of 150 percent to 75 percent, before being lowered to 40 percent by the end of the 10-year implementation period. Tariffs on British automobiles, which currently exceed 100 percent, will be reduced to 10 percent under a quota system.
Other British exports — such as medical devices, cosmetics, aerospace components, salmon, lamb, chocolate, and biscuits — will also see tariff cuts.
India’s Ministry of Commerce stated that 99 percent of Indian exports to the UK will enjoy zero import duties once the agreement is fully implemented. Indian Trade Minister Piyush Goyal said the deal would boost India’s role in global supply chains and help advance its economic goals.
“This brings us closer to our goal of becoming a global economic powerhouse. It protects our core interests while opening doors to India’s greater participation in global value chains,” Goyal said.
The agreement also introduces a “Double Contribution Convention,” which allows Indian nationals working in the UK—and British nationals working in India—to be exempt from social security payments for up to three years.
Prime Minister Narendra Modi and UK Prime Minister Keir Starmer spoke by phone to mark the deal, with Modi extending an invitation for Starmer to visit India. The two leaders are expected to meet in the coming months to officially sign the agreement.
“These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies,” Modi said on X (formerly Twitter).
Starmer described the trade pact as a key component of his government’s plan to strengthen the UK economy. “Strengthening our alliances and reducing trade barriers with economies around the world is part of our Plan for Change to deliver a stronger and more secure economy here at home,” he said.
India has also sought an exemption from the UK’s upcoming carbon border tax, which is expected to be implemented in 2027. While no specific terms were disclosed, officials said discussions on this and related issues would continue.
The trade deal arrives at a time when many countries are reevaluating economic strategies and forming new partnerships in response to the global trade environment, including the lingering effects of tariffs imposed during former U.S. President Donald Trump’s administration.
Would you like a shorter summary or bullet-point version of this article as well?
The latest news in your social feeds
Subscribe to our social media platforms to stay tuned