UK signs 'landmark' trade deal with India
)
Posted: Tue 6th May 2025
The UK and Indian governments have agreed a free trade deal after three years of negotiations.
UK prime minister Keir Starmer described it as "landmark" agreement and the most valuable deal the UK has completed since leaving the European Union. The government said it will increase bilateral trade by £25.5 billion, UK GDP by £4.8 billion and wages by £2.2 billion each year in the long run.
Indian tariffs will be cut, with 85% becoming fully tariff-free within a decade. The government said that based on 2022 trade, it amounts to India cutting tariffs worth over £400 million when the deal comes into force, which will more than double to around £900 million after 10 years.
Examples include tariffs on whisky and gin dropping from 150% to 75%, soft drink tariffs falling from 33% to 0% after seven years, lamb tariffs dropping from 33% to 0% at entry into force and high-end cars benefitting from a drop in tariffs from over 100% to 10% under a quota.
Other terms of the trade deal include:
First time access for UK businesses to India's procurement market. This includes 40,000 tenders with a value of at least £38 billion a year covering sectors, including transport, healthcare and life sciences and green energy.
UK firms will have access to India's procurement portal and get exclusive treatment under the 'Make in India' policy, which currently provides preferential treatment for federal government procurement to businesses who manufacture or produce in India. The agreement means if at least 20% of a company's product or service is from the UK, they will be treated as a 'class two local supplier', granting them the same status that is currently only ever given to Indian businesses.Enhanced copyright protections for the creative sector "enabling exporters to feel confident exporting to India with a commitment that works will continue to be protected for at least 60 years". India will also conduct an internal review of their copyright protection terms.
Guaranteeing access for the UK's world-class financial and professional business services sectors to India.
Commitments from India on digital trade for the UK's digital and technology sectors, such as promoting digital systems and paperless trade.
Some Indian and UK workers will be exempt from paying National Insurance for three years. The "double contribution convention" agreement for Indian and UK workers tranferring to work for their company in the other country means they will only pay contributions in their home nation, rather than in both places.
A UK visa scheme, currently not available to India, will now be open to Indian workers. Professions covered include yoga teachers, musicians and chefs. It is capped at 1,800 people.
Keir Starmer said:
"We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK's economy, putting more money in working people's pockets.
"Through this government's stable and pragmatic leadership, the UK has become an attractive place to do business. Today we have agreed a landmark deal with India - one of the fastest growing economies in the world, which will grow the economy and deliver for British people and business."
Business and trade secretary Jonathan Reynolds added:
"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 and unlocking growth in every corner of the country, from advanced manufacturing in the North East to whisky distilleries in Scotland.
"In times of global uncertainty, a pragmatic approach to global trade that provides businesses and consumers with stability."
Posting on X, India prime minister Narendra Modi said:
"In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention.
"These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies. I look forward to welcoming PM Starmer to India soon."
India is predicted to move from the world's fifth-largest economy to third in the next three years. By the end of the decade, it will be home to an estimated 60 million middle-class consumers, whose numbers are projected to grow to 250 million by 2050. By 2035, their demand for imports is expected to top £1.4 trillion.
Related resources
Grow your small business by exporting to India
You might also like…
