RIO DE JANEIRO, BRAZIL – NOVEMBER 18: UK Prime Minister Sir Keir Starmer (L) during a bilateral meeting with Prime Minister of India Narendra Modi as he attends the G20 summit at the Museum of Modern Art on November 18, 2024 in Rio de Janeiro, Brazil. Keir Starmer is attending his first G20 Summit since he was elected Prime Minister of the UK. He is expected to hold talks with President Xi Jinping of China, the first time a UK PM has done so for six years. (Photo by Stefan Rousseau – WPA Pool/Getty Images)
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The United Kingdom and India struck a bilateral trade agreement Tuesday, lowering tariffs on key exports such as U.K. whisky and cars, amid a global trade war initiated by the United States.
The deal will see India gradually lower taxes on imports from the U.K., with the vast majority of goods traded becoming “fully tariff-free within a decade,” according to the British government.
Exports from the U.K., such as whisky and gin, will see tariffs halved from 150% to 75%, before reducing to 40% within a decade under the agreement. Meanwhile, many automotive tariffs will be cut sharply from over 100% to 10%, the government added.
The trade agreement between India and the U.K. comes at a time of rising trade tensions globally. U.S. President Donald Trump has raised tariffs on imports worldwide, straining relations with allies and adversaries.
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The U.K. government said the agreement is expected to increase bilateral trade by £25.5 billion ($34 billion). Trade between the two nations stood at £42.6 billion in 2024, up 8.3% from the previous year.
At the end of 2024, the U.K. had a £8.4 billion trade deficit with India across goods and services. The South Asian nation was the country’s 11th-largest trading partner.
The deal is the first to be struck under British Prime Minister Kier Starmer’s premiership.
Business and Trade Secretary, Jonathan Reynolds welcomes Indian Minister of Commerce and Industry, Piyush Goyal to London for trade talks.
Department for Business and Trade
“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,” Starmer said in a statement.
“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.”
Indian Prime Minister Narendra Modi posted on X that the deal will “deepen” the relationship between the two countries. “In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention,” Modi said.
“These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies,” he added.
The Indian government said the U.K. will remove all tariffs on 99.1% of imports as soon as the agreement comes into force.
In addition, New Delhi said Indian employees working in the U.K. temporarily will be exempt from paying national insurance for up to three years, under the “double contribution convention”. The U.K. also has similar agreements with South Korea, Japan and Chile.
The deal comes amid trade tensions with the United States. Both India and the U.K. are engaged in trade talks with Washington after President Donald Trump imposed reciprocal tariffs worldwide.
“The timing couldn’t be better, with the FTA enhancing the economic resilience of both the UK and India by providing access to new markets and reducing vulnerability to external shocks,” said Keshav R. Murugesh, chief executive of NYSE-listed WNS, a business transformation and services company that operates in the U.S., U.K., and India.
“This is particularly important in a world where trade tensions are on the rise,” added Murugesh, who is also chairman of the Confederation of Indian Industry UK Business Forum.
