# UK and India sign trade deal after years of stalled talks
On 2025-05-06, the United Kingdom and India announced a free trade agreement that both governments cast as a major step in their economic relationship. The deal follows more than three years of negotiation, a pause under the previous British government and a February resumption of talks after tariff threats from the United States reshaped the broader trade environment.
The main economic effect is tariff relief. India will slash tariffs on 90% of British products sold in the country, including whisky, gin, lamb meat, medical equipment and aerospace goods. Britain, meanwhile, will remove tariffs on textile imports, and 99% of Indian exports to the UK will face zero tariffs under the agreement. That means the deal is designed to cut costs on both sides, while giving each country clearer access to products it wants to export more aggressively.
British ministers described the pact as the country’s biggest and most economically significant bilateral trade agreement since leaving the European Union in 2020. They said the deal could add 25.5 billion pounds a year to bilateral trade by 2040, from a 2024 trade total of 42 billion pounds. That projection gives the agreement a long horizon, but it also shows how much of the political messaging is tied to future growth rather than immediate wins.
For India, the most visible changes are likely to be in whisky and cars. Tariffs on whisky and gin will fall from 150% to 75% before declining further over the life of the deal, and car tariffs are set to fall to 10% from more than 100%. The agreement also opens the door to lower tariffs on cosmetics, salmon, soft drinks, chocolate and biscuits, broadening the range of British goods that should become more competitive in the Indian market.
For Britain, the textile changes are just as important. Removing tariffs on those imports is a direct benefit to India’s garment industry and may help London present the deal as a way to lower consumer costs while expanding trade. India also said the agreement should open export opportunities in marine products, leather, sports goods, toys, gems and jewellery, engineering goods and auto parts.
The deal also includes labour provisions. Temporary Indian workers in Britain and their employers will be exempt from social security contributions in Britain for three years, a clause that is likely to be scrutinised closely in domestic political debate. That detail reflects the wider balance negotiators were trying to strike between market access, business opportunity and political acceptability.
Prime Minister Keir Starmer called the agreement a landmark and said it would help growth for British people and business. Prime Minister Narendra Modi called it a historic milestone that could drive trade, investment, job creation and innovation. Both leaders are now trying to turn a technical tariff accord into evidence that their governments can still deliver large-scale economic diplomacy.
The agreement will still need to be turned into legal and administrative changes before exporters feel the full benefit, but the tariff schedule gives both governments a clear political win to advertise. For India, the cut in car and whisky tariffs could make the deal visible to consumers and major producers quickly. For Britain, the removal of duties on textiles and the wider zero-tariff access for Indian exports may help show that post-Brexit trade policy can still deliver concrete commercial openings. The next phase is implementation and political management at home.
*Event date: 2025-05-06.*
