The UK and India have finally signed a long-anticipated trade agreement, hailed as a “landmark” deal, after more than three years of negotiations. The agreement is expected to transform the trade relationship between the two nations, ushering in a new era of economic cooperation with one of the world’s fastest-growing economies, home to over 1.4 billion people.
At the heart of the deal are substantial tariff reductions that will affect a wide range of goods and services traded between the two countries. In total, tariffs on 90% of UK exports to India will be reduced, with 85% of those becoming entirely tariff-free within the next ten years.
One of the most eye-catching announcements involves British whisky and gin exports, which currently face staggering tariffs of 150% when entering the Indian market. Under the new arrangement, those duties will be halved immediately to 75%, with further reductions down to 40% by the tenth year. This marks a historic move, particularly as India’s recent trade agreements, including one with Japan, did not secure such concessions for spirits.
The automotive industry is another big winner, with car and vehicle part tariffs slashed from over 100% to just 10%. This will be a significant boost for British manufacturers, particularly as global carmakers face uncertain trading conditions with the United States, where import tariffs have been sharply increased under Donald Trump’s trade policies.
Beyond cars and alcohol, a wide spectrum of British exports will see better access to Indian markets. These include:
- Aerospace technology and components
- Cosmetics and personal care products
- Food and drink products such as lamb, salmon, chocolate, biscuits, and soft drinks
- Advanced machinery, electrical circuits, and conductors
- Medical equipment and devices
Meanwhile, UK consumers are also set to benefit from reductions in tariffs on Indian imports. In particular, the deal removes duties on Indian textiles – a key sector for employment in India, especially among low-income workers. Lower costs for British importers are expected to translate to more affordable clothing and goods for shoppers on the high street.
Other Indian exports gaining easier access to the UK include:
- Clothing and textiles
- Footwear and leather goods
- Frozen prawns and other food products
- Jewellery and precious stones
- Sports equipment and toys
- Vehicle components and engines
The agreement also contains provisions aimed at strengthening professional and cultural exchanges between the two countries. One significant concession sees the introduction of the double contribution convention (DCC), which ensures that Indian professionals working temporarily in the UK – and vice versa – won’t be required to pay social security contributions in both countries for a period of up to three years.
This is expected to improve the mobility of skilled professionals and increase the attractiveness of the UK as a destination for Indian workers in sectors such as finance, engineering, and IT. However, the government has confirmed there will be no changes to overall immigration policy.
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In addition, a new scheme will allow a capped number of Indian professionals, including chefs, musicians, and yoga instructors, to apply for work visas under simplified conditions. This particular provision was a direct request from the Indian delegation during negotiations, aimed at promoting cultural exchange.
However, not everything made it into the final agreement. The UK held firm on keeping tariffs on milled rice imports from India, citing concerns over impacts on other global rice producers. Likewise, India did not agree to lower its duties on UK dairy products, leaving that sector unchanged for now.
Overall, the deal is being seen as a strategic win for post-Brexit Britain, offering access to a booming consumer market and bolstering trade diversification beyond Europe. Analysts say the true test will lie in how swiftly businesses adapt to and capitalise on the opportunities this agreement presents.
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