The UK and India have agreed a trade deal that will make it easier for UK firms to export whisky, cars and other products to India, and cut taxes on India’s clothing and footwear exports.
The British government said the “landmark” agreement, which took three years to reach, did not include any change in immigration policy, including towards Indian students studying in the UK.
Prime Minister Sir Keir Starmer said the deal would boost the economy and “deliver for British people and business”.
Last year, trade between the UK and India totalled £42.6bn and was already forecast to grow, but the government said the deal would boost that trade by an additional £25.5bn a year by 2040.
India’s prime minister, Narendra Modi, described the agreement as an historic milestone that was “ambitious and mutually beneficial”.
The pact would help “catalyse trade, investment, growth, job creation, and innovation in both our economies”, he said in a post on social media platform X.
Once it comes into force, which could take up to a year, UK consumers are likely to benefit from the reduction in tariffs on goods coming into the country from India, the Department for Business and Trade said.
That includes lower tariffs on:
- clothing and footwear
- cars
- foodstuffs including frozen prawns
- jewellery and gems
The government also emphasised the benefit to economic growth and job creation from UK firms expanding exports to India.
UK exports that will see levies fall include:
- gin and whisky
- aerospace, electricals and medical devices
- cosmetics
- lamb, salmon, chocolates and biscuits
- higher value cars
The British government said the deal was the “biggest and most economically significant” bilateral trade agreement the UK had signed since leaving the European Union in 2020.
UK Business Secretary Jonathan Reynolds said the benefits for UK businesses and consumers were “massive”.
Tariffs on gin and whisky, a key sticking point in negotiations previously, will be halved to 75%, with further reductions taking effect in later years.
Tariffs of 100% on more expensive UK-made cars exported to India will fall to 10%, subject to a quota limiting the total number.
The deal also includes provisions on the services sector and procurement allowing British firms to compete for more contracts.
Under the terms of the deal, some Indian and British workers will also gain from a three-year exemption from social security payments, which the Indian government called “an unprecedented achievement”.
The exemption applies to the staff of Indian companies temporarily transferred to the UK, and to UK firms’ workers transferred to India. Social security contributions will be paid by employers and employees in their home country only, rather than in both places.
The UK already has similar reciprocal “double contribution convention” agreements with 17 other countries including the EU, the US and South Korea, the government said.