International Trade News - UK – India Trade Agreement

UK – India Trade Agreement

The UK and India have agreed a landmark trade deal which delivers on this government’s core mission of growing the economy, raising living standards, and putting money in people’s pockets.

Huge economic win for UK as trade deal with India agreed which will deliver for working people and British businesses
Deal will slash Indian tariffs on key products such as whisky, cosmetics and medical devices, locking in reductions on 90% of tariff lines for UK exports to unleash opportunities for businesses across regions and nations of UK
Delivers on Plan for Change as £4.8 billion added to UK economy and £2.2 billion in wages every year in the long run under deal

Business and Trade Secretary Jonathan Reynolds and Indian Commerce Minister Piyush Goyal held final talks in London after relaunching negotiations only two months ago. Negotiators across both sides have worked around the clock since February to get this deal done, which is the biggest and most economically significant bilateral trade deal the UK has done since leaving the EU, and the best deal India has ever agreed.

Tariffs to be slashed

Indian tariffs will be slashed, locking in reductions on 90% of tariff lines, with 85% of these becoming fully tariff-free within a decade.

Whisky and gin tariffs will be halved from 150% to 75% before reducing to 40% by year ten of the deal, while automotive tariffs will go from over 100% to 10% under a quota.

Other goods with reduced tariffs, which can open markets and make trade cheaper for businesses and Indian consumers, include cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits.

The Benefits to the UK

British shoppers could see cheaper prices and more choice on products including clothes, footwear, and food products including frozen prawns as UK liberalises tariffs.

The deal is expected to 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.

UK businesses gain a competitive edge over international competitors when entering India’s enormous market as it gets even bigger, forecasted to become the 3rd largest global economy within three years.

Read the full government release here

Comments & Reactions

Prime Minister 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.

Strengthening our alliances and reducing trade barriers with economies around the world is part of our Plan for Change to deliver a stronger and more secure economy here at home.”

Business and Trade Secretary Jonathan Reynolds said: “This government’s number one mission is growing the economy as part of our Plan for Change so we can put more money in people’s pockets.

"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 is more important than ever.”

Reacting to news of an agreement in principle for a free trade deal between the UK and India, William Bain, Head of Trade Policy, said:   “A Free Trade Agreement (FTA) between the UK and India is a huge boost to our economies and a welcome lift for our exporters. Both Governments should be congratulated for their strong engagement with business and hard work throughout long, but ultimately successful, negotiations.

“Against the backdrop of mounting trade uncertainty across the globe, these tariff reductions will be a big relief. Products from Scotch whisky to clothing will benefit and this will give UK companies exporting to India a clear edge on increasing sales.

“There is great potential for future expansion with a trusted trading partner in the fastest growing region of the world’s economy."

Richard Heald, Chair of the UK India Business Council (UKIBC) – a member of the BCC’s international Chamber Network, said: “The UK India Business Council welcomes the signing of the FTA between the United Kingdom and India. This marks a significant milestone in the deepening of economic and strategic ties between our two nations. “

Read their full statements here

Further Information

The UK has secured the best deal India has ever agreed, providing businesses with security and confidence to trade with the fastest-growing economy in the G20.

Read more information including case studies here

This technical note sets out the Department for Business and Trade’s (DBT) preliminary estimates for the economic impact of the UK-India Free Trade Agreement.