Published on 06/05/2025
After three years of hard-fought negotiations, the U.K. and India finally have a trade deal they can agree on.
Prime Ministers Keir Starmer and Narendra Modi agreed the deal in a call Tuesday after an intensive negotiating sprint by trade officials in London last week.
Striking the deal became a top economic priority for both nations as U.S. President Donald Trump unleashed a series of major tariff actions on its biggest trading partners.
“We are now in a new era for trade and the economy,” Starmer said as the deal was announced on Tuesday. “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.”
Modi said the landmark deal will “further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies. I look forward to welcoming PM Starmer to India soon.”
The pact is the most valuable post-Brexit trade deal the U.K. has struck since leaving the European Union. An economic forecast by the British government suggests the deal will increase the U.K.’s GDP by £4.8 billion by 2040.
Negotiators have been working around the clock on the deal since Britain’s Trade Secretary Jonathan Reynolds traveled to Delhi in February to relaunch the deal with Indian Commerce Minister Piyush Goyal following elections in both countries last year.
Goyal and Reynolds were nearly able push the deal over the line when India’s trade chief returned to London Friday following visits to Oslo and Brussels. The two put the finishing touches to the pact over the weekend.
Negotiators, however, were unable to secure a Bilateral Investment Treaty being sought in parallel with talks for the trade agreement. Negotiations to secure an investment treaty continue.
Slashing tariffs
As it stands, the deal will cut through high tariffs on U.K. goods in India with 85 percent becoming tariff-free within a decade. The effect will be equivalent to slashing £1 billion in tariffs after 10 years.
Measures include lowering India’s 150 percent tariff on Scotch whisky by half immediately, before it is cut to 40 percent after ten years. Duties on the auto sector will drop from 100 percent to 10 percent with quotas on both sides for the sensitive sector.
Indian duties will also be lowered on cosmetics, aerospace, medical devices, electrical machinery and agriculture and food. Britain will lower tariffs on textiles, footwear, frozen prawns and other food products.
Talks stalled under the previous Conservative government over concerns about migration, better access for services firms and a host of other issues.
Last month negotiators overcame a significant hurdle in the talks when they closed the mobility chapter.
Under the deal, existing visa routes will be more accessible for some workers. Indian applicants will still need to meet the usual visa requirements on salary and skills.
But in some cases, India has asked for professions such as chefs, musicians, and yogis, to be covered by standard business visa pathways. Chefs, yoga teachers and musicians will be covered by the changes and there will be a cap of 1,800 on how many within those professions can use that route.
Negotiators also resolved another sticking point in the talks with India securing a “Double Contribution Convention,” exempting Indian employees temporarily working in the U.K. — and their employers — from paying into Britain’s state pension pot for up to three years.
“This will make Indian services providers significantly more competitive in the UK,” the Indian government said in a statement.
Britain’s nascent tax on high-carbon emissions imports is of significant concern for India. Yet this won’t be dealt with in the trade deal and is part of ongoing bilateral discussions.
Months of legal scrubbing of the text comes next, but the hope in London and New Delhi is that Starmer and Modi will be able to finalize the pact at some point later this year.
Modi is racing to transform India into a developed nation by 2047. Its economy overtook Japan’s as the world’s fourth largest globally this year and is projected to take the third spot by 2028.
This developing story is being updated.
