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Britain and India on Tuesday agreed on a “landmark” free trade agreement, which London claimed to increase the British economy by 4.8bn in the long run, with large cuts on Indian tariffs in UK exports and cars.
Talks on the deal, which have been dragged for three years, accelerated the wake of US President Donald Trump’s setting for global tariffs last month, with London and New Delhi tend to close the nearest trade links.
“In a historic historic moment, India and the United Kingdom have successfully completed an ambitious and useful free trade agreement,” Indian Prime Minister Narendra Modi posted on X after a conversation with his UK counterpart Sir Starmer.
Modi added that the agreement “would help catalyze trade, investment, growth, job creation and innovation in both our economies” and that Starmer would visit India soon.
British ministers hope that the trade agreement in India may be a prelud to sign a deal with Trump in the coming days, ahead of an agreement with the EU to begin improving bilateral trade links at a Samit on May 19th.
While Britain secured lower export fees to India, including whiskey, jinn and cars, New Delhi wanted better conditions to help its professional workers get jobs in the IT sector as well as lower textile fees.
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Starmer said the deal was a response to “a new era for trade and economy” and it was a sign that his government, which was beaten in local elections last week, was giving to the British public.
“Today, we have agreed with a historic agreement with India, one of the fastest growing economies in the world, which will grow the economy and give to British people and business,” he said.
The whiskey fees and gin will halve from 150 percent to 75 percent before falling to 40 percent by the tenth year of the agreement. Car fees will drop from more than 100 percent to 10 percent, subject to a quota.
The United Kingdom Government said the fees in the fees for Indian products will help secure British buyers “cheaper prices and more choices” in areas including clothes, shoes and food products such as prawns.
Although the full details are not yet available, the Trade Pact is expected to be one of the most important new agreements signed by Britain since leaving the EU, following agreements with Australia and Japan.
It is also likely to be one of the most important signed by India under the government of Modi, which has signed FTA with the United Arab Emirates, Australia and the European Free Trade Association over the past decade.
Based on the trade of 2022, the agreement will include India’s cutting fees worth more than 400 million or a year when the agreement came into force, rising to about £ 900m after 10 years, the United Kingdom government said.
She added that she expected the agreement to increase the bilateral trade with £ 25.5bn and GDP in the UK with 4.8bn £ in the long run. The bilateral trade between the United Kingdom and India was 42.6bn £ 2024 while the GDP in the UK was 2,851bn £.
The announcement said the agreement would bring “market security” to the UK services currently worth £ 500 billion per year. However, the legal society of England and Wales said that the agreement had failed to include legal services and was a “lost opportunity”.
The United Kingdom Government insisted that the trade agreement did not include changes in its visa system or a wider immigration strategy, at a time when the UK reform is making a difficult campaign for the matter.
UK government officials have said the agreement will make it easier for Indian companies to transfer professional UK employees to short -term transfers.
Indian employees will not have to pay national insurance contributions while in short -term transoperative transparements to the UK, but will still be subject to the same wage thresholds and have to pay the NHS addition to immigrant workers.
India will hold domestic tariffs for dairy products, while the United Kingdom is holding restrictions on some agricultural products such as ground rice.
India was the second largest export market for Scottish whiskey in volume in 2023, according to the Association of Uiski Scotch, which welcomed the agreement as a “historic moment” for the industry. India is the third largest market for cars after the US and China, though the business department said these would be governed by a “quota” without elaborating.
Sam Lowe, the Consultancy Leader Flint Global, said being among the first places to hit a free trade agreement with India was a victory for the United Kingdom, but the final benefits would only become clear over time.
Additional reporting by AMY Borrett
