UK and India Forge Landmark Free Trade Agreement
In a significant development, Britain and India have unveiled a free trade agreement aimed at boosting economic ties between the two nations. This deal will dramatically cut tariffs on various products, including iconic British exports like Scotch whisky and English gin, as well as Indian favorites such as food and spices.
After more than three years of discussions that faced numerous challenges, Indian Prime Minister Narendra Modi emphasized that the agreement is ambitious and mutually beneficial. British Prime Minister Keir Starmer also hailed the deal as a landmark achievement, stating, "This is the biggest trade agreement the U.K. has signed since leaving the EU, and it represents India’s most ambitious trade effort to date."
The agreement promises to lower Indian import taxes on a range of British goods, including whisky, cosmetics, medical devices, cars, and lamb. Notably, tariffs on whisky and gin will be halved from 150% to 75%, eventually dropping to 40% within ten years. Similarly, automotive tariffs will significantly decrease from over 100% to 10% under a quota.
According to India’s Trade Ministry, the deal will allow 99% of Indian exports to enter the U.K. without facing import duties, encompassing textiles, marine products, and leather goods.
Trade Minister Piyush Goyal noted that this agreement paves the way for India’s ambitions to become a global economic leader, allowing for greater collaboration in developing products and services for international markets. The British government anticipates that this trade deal could enhance bilateral trade by £25.5 billion ($34 billion) annually by 2040, adding nearly £5 billion ($6.7 billion) to the U.K. economy.
Leaders in the Scotch whisky industry are particularly optimistic, with Mark Kent from the Scotch Whisky Association describing the deal as transformational. Considering India’s massive population of 1.4 billion, he believes the agreement could boost Scotch whisky exports to India by £1 billion over the next five years.
During negotiations, the issue of visas for Indian nationals proved contentious. The British government faces pressure to limit immigration, especially following the success of the Reform UK party in recent local elections. While Business Secretary Jonathan Reynolds stated that the trade deal would not change immigration policies, it does introduce modest adjustments to business mobility. This includes provisions allowing Indian musicians, chefs, and yoga instructors to apply for U.K. visas, along with a three-year exemption from British social security contributions for Indian workers in the U.K.
The agreement still requires ratification by both governments and comes amid a global trend where countries are rushing to establish trade deals in the wake of tariffs enacted by various administrations, including previous U.S. policies.
Experts see this trade partnership as a bright spot in a world increasingly leaning towards protectionism. The U.K.-India negotiations began long before recent political shifts, with formal discussions starting in 2022 after Boris Johnson set ambitious targets following Brexit.
As both nations prepare to move forward, Modi has invited Starmer to visit India, signaling the potential for even stronger ties in the future.
