The United Kingdom and India have signed a historic free trade agreement, marking a significant milestone in their economic partnership. The deal, valued at £25.5 billion ($34.4 billion), aims to boost trade between the two countries and strengthen their strategic relationship.
British Prime Minister Keir Starmer hailed the agreement as a “landmark moment” for both countries, emphasizing the unique bonds of history, family, and culture between the UK and India. “This is not the extent or the limit of our collaboration with India,” Starmer said. “We have unique bonds of history, of family and of culture, and we want to strengthen our relationship further, so that it is even more ambitious, modern and focused on the long term.”
Indian Prime Minister Narendra Modi described the deal as a “blueprint for our shared prosperity,” highlighting its potential to benefit India’s youth, farmers, fishermen, and MSME sector. The agreement is expected to eliminate or reduce tariffs on imports and exports between the two nations, with 99% of Indian exports facing no import duty under the deal.
Key Highlights of the Agreement
- Tariff Reductions: The UK government said the deal will reduce India’s average tariff on British goods from 15% to 3%. Import taxes on whisky and gin will be halved from 150% to 75% before falling to 40% by year 10 of the deal. Automotive tariffs will fall from more than 100% to 10% under a quota.
- Trade Boost: The UK and India hope the accord will boost trade between the two countries by £25.5 billion ($34.4 billion) and eventually add £4.8 billion ($6.5 billion) a year to the UK economy.
- Investment and Job Creation: The deal is expected to create thousands of British jobs across the UK, unlock new opportunities for businesses, and drive growth in every corner of the country.
- Strategic Partnership: The agreement represents India’s biggest strategic partnership with an advanced economy and could provide a template for a long-mooted deal with the EU as well as talks with other regions.
The two countries also announced almost £6 billion ($8 billion) in trade and investment deals in areas including AI, aerospace, and dairy products, and pledged to work more closely together in areas such as defense, migration, climate, and health. The UK-India Vision 2035 will take their partnership to new heights, focusing on innovation, deepening defense cooperation, tackling climate change, and nurturing educational connections.¹ ²