Both sides celebrate a few years of landmark agreements.
India and the UK have agreed to a trade deal that will come after three years of negotiations, saying they will boost the economy amid fallout from President Donald Trump’s tariffs.
The UK government said on Tuesday that the deal is “expected to increase bilateral trade by £25.5 billion ($34 billion), UK GDP by £4.8 billion ($6.4 billion) and wages by £2.2 billion ($2.9 billion) each year in the long term.”
“India’s tariffs will be reduced, 90% reductions in the tariff line will be reduced, and 85% of these will be completely tariff-free within 10 years.”
The UK’s alcohol and automotive industry is part of the main beneficiaries, with whiskey and gin tariffs halving to 75% and falling to 40% by the 10th year. Automobile customs duties range from 100% or more to 10% under quota.
Fees will also be reduced for UK exports such as cosmetics, medical devices, aerospace parts, lamb, salmon, chocolate and biscuits.
The Indian Ministry of Trade said 99% of India’s exports would not face import taxes under the contract.
“This brings us closer to our goal of becoming a global economic powerhouse. We protect our core interests while opening the door to greater participation in India’s global value chain,” Trade Minister Piyush Goyal said.
The contract introduces a “double contribution treaty” that exempts British Indian workers from national insurance payments for up to three years.
Advanced negotiations on another bilateral investment treaty and further discussions on labor and environmental standards are also underway.
Indian Prime Minister Narendra Modi and his British counterpart Kier Stage spoke on Tuesday to mark the agreement by phone, and Modi invited priorities to visit the country.
“These groundbreaking agreements further deepen our comprehensive strategic partnership and catalyze trade, investment, growth, job creation and innovation in both economies,” Modi said in a post in X.
“Strengthening our partnerships and reducing trade barriers with economies around the world are part of a change plan to provide a stronger and safer economy here at home,” praises the government for saying it is the UK’s largest trade agreement since it left the European Union in 2020.
The two leaders are expected to meet in the coming months to sign and finalise the contract.
India also sought to receive the UK’s upcoming carbon tax exemption, a climate policy tool scheduled to be implemented from 2027, but authorities did not elaborate on the details of Tuesday’s statement.
This deal happens as countries around the world are pondering new strategies and negotiating trade contracts to cover the costs of tariffs imposed by the US Trump administration.