The UK and India have finalised a landmark free trade agreement that slashes tariffs on goods, opens up vast procurement markets, and is projected to add £4.8 billion annually to the UK economy by 2040. The deal, years in the making, is the most comprehensive bilateral agreement Britain has secured since leaving the European Union.
Under the deal, tariffs will be cut or eliminated on 90% of British exports to India, including whisky, gin, automotive products, medical devices, aerospace parts, and luxury goods. In return, India will benefit from reduced UK tariffs on clothing, footwear, gems, jewellery, and food items like frozen prawns. British car exports will see tariffs fall from over 100% to just 10%, while duties on Scotch whisky will drop from 150% to 75% immediately, and to 40% within ten years.
Prime Minister Keir Starmer called the agreement a “landmark deal” that would “deliver for British people and business,” while Indian Prime Minister Narendra Modi described it as an “historic milestone” that would deepen the strategic partnership between the two countries. Trade between the UK and India stood at £42.6 billion in 2024 and is now expected to grow by an additional £25.5 billion annually.
Key sectors set to benefit
The deal is a major win for UK industries facing headwinds from rising global tariffs, particularly in the US. The Scotch whisky industry, for example, is poised for a surge in exports. The Scotch Whisky Association called it a “once-in-a-generation deal,” predicting a £1 billion boost in sales to India over five years. Automotive exporters and medical device manufacturers are also expected to see significant growth.
Smith+Nephew CEO Deepak Nath said the agreement “offers the potential to build trading links in the healthcare sector,” while John Smedley Ltd described India as one of the fastest-growing luxury markets and a key focus for expansion.
The deal opens procurement access to around 40,000 Indian government tenders worth an estimated £38 billion annually. UK firms will also benefit from preferential treatment under India’s “Make in India” policy, if at least 20% of their product value originates in the UK.
Business endorsements and strategic ambitions
Major firms across sectors welcomed the deal. Standard Chartered called it a “significant achievement,” UPS hailed the enhanced connectivity, and Diageo said it would “power jobs and investment” on both sides. Chivas Brothers, which exports £2 billion of spirits annually, highlighted the impact of reduced whisky tariffs on long-term growth and investment.
EY’s Rohan Malik said the deal “accelerates an already thriving partnership,” citing the doubling of UK-India trade over the last decade. Concrete Canvas Ltd and Belfast-based medtech company Biopanda also praised the removal of trade barriers.
Strategic and geopolitical context
The agreement arrives at a time of growing global trade tensions, particularly following the US’s imposition of widespread tariffs. With India set to become the third-largest global economy within the next three years, the deal gives the UK early-mover advantage in a vast and growing consumer market of 1.45 billion people.
It also includes the so-called Double Contribution Convention, allowing temporary employees from both countries to avoid dual social security payments for up to three years. The policy drew some domestic criticism but mirrors provisions the UK already has with the US, EU, Japan, and South Korea.
The deal includes chapters on anti-corruption, labour rights, the environment, and gender equality—India’s first such commitments in any trade agreement.
Next steps and ratification
The agreement is expected to come into force in 2025 after being ratified by both parliaments. Prime Ministers Modi and Starmer are scheduled to meet later this year to formally sign the deal.
“This agreement demonstrates that we can strike ambitious, values-led trade deals that work for our businesses, our workers, and our strategic interests,” said UK Business Secretary Jonathan Reynolds.
