UK and India sign a 'landmark' trade agreement after years of tough
negotiations
[May 07, 2025] By
JILL LAWLESS and RAJESH ROY
LONDON (AP) — Britain and India announced Tuesday that they have agreed
on a hard-wrought free trade agreement that will slash tariffs on
products including Scotch whisky and English gin shipped to India and
Indian food and spices sent to the U.K.
The deal comes more than three years after negotiations started — and
stalled — under a previous British government.
Indian Prime Minister Narendra Modi said on X that the deal was
“ambitious and mutually beneficial.” British Prime Minister Keir Starmer
called it a “landmark.”
“This is the biggest trade deal that we the U.K. have done since we left
the EU, and it’s the most ambitious trade deal that India has ever
done," Starmer said.
The U.K. government said the deal will reduce Indian import taxes on
British goods including whisky, cosmetics, medical devices, cars,
airplane parts and lamb. Whisky and gin tariffs will be halved from 150%
to 75% before falling to 40% by year 10 of the deal. Automotive tariffs
will fall from over 100% to 10% under a quota.
India's Trade Ministry said 99% of Indian exports would face no import
duty under the deal, which applies to products including textiles,
marine products, leather, footwear, toys, gems and jewelry.
“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,” Trade Minister
Piyush Goyal said.
Modi’s office said the agreement covered trade in both goods and
services, and would “unlock new potential for the two nations to jointly
develop products and services for global markets.”
Britain said the deal is expected to increase bilateral trade by 25.5
billion pounds ($34 billion) a year from 2040 and add almost 5 billion
pounds ($6.7 billion) a year to the British economy.
Mark Kent, chief executive of the Scotch Whisky Association, said the
deal would be “transformational” for the industry. India, a country of
1.4 billion people, is the world’s largest whisky market, and Kent said
the agreement had “the potential to increase Scotch whisky exports to
India by 1 billion pounds over the next five years.”
The issue of visas for Indian nationals was a sticking point in the
talks. The British government is under pressure to cut immigrant numbers
— pressure heightened by the success of anti-immigrant party Reform UK
in local elections in England last week.
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Britain's Prime Minister Keir Starmer leaves 10 Downing Street to
attend the weekly Prime Ministers' Questions session in parliament
in London, Wednesday, April 30, 2025. (AP Photo/Kin Cheung)
 Business Secretary Jonathan Reynolds
said the trade deal had “no impact on the immigration system,” but
made “modest changes to business mobility.”
The agreement adds Indian musicians, chefs and yoga instructors to
the groups who can apply for U.K. visas, and includes a three-year
exemption from British social security contributions for Indian
workers in the U.K. The same exemption will apply to British workers
in India.
The deal, which must be ratified by both countries, comes as
countries around the world scramble to strike trade deals to make up
for tariffs imposed by President Donald Trump on America's trading
partners.
Rain Newton-Smith, chief executive of employers' organization the
Confederation of British Industry, said the trade deal between India
and Britain — the world's fifth- and sixth-largest economies — was a
“beacon of hope amidst the specter of protectionism."
U.K.-India trade negotiations began long before Trump's re-election.
Formal talks began in 2022 on a free trade agreement that then-Prime
Minister Boris Johnson hailed as a key goal after Britain’s
departure from the European Union in 2020. Johnson famously promised
to have a deal done by Diwali in October of that year.
The two countries held 13 rounds of negotiations without a
breakthrough before talks were suspended while both nations held
general elections in 2024.
Modi was re-elected, and Britain replaced the Conservative
government with one led by Starmer’s Labour Party.
The two leaders spoke by phone on Tuesday, and Modi said he had
invited Starmer to visit India soon. Starmer's office said he would
go there “at the earliest opportunity.”
___
Roy reported from New Delhi.
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