In a historic shift that has taken three years to craft, the United Kingdom and India have signed a sweeping trade deal that will slash tariffs, open up markets, and inject billions into both economies—without altering immigration rules.
Billed as the UK’s most significant post-Brexit trade agreement, the deal will unlock a projected £25.5 billion (A$49.2 billion) in additional annual trade by 2040, while boosting British GDP by £4.8 billion (A$9.3 billion) and raising wages by £2.2 billion (A$4.2 billion) annually.
Prime Minister Sir Keir Starmer called it “a historic day for the United Kingdom and for India”, promising the agreement would “raise living standards, put more money in the pockets of British working people, and deepen the unique ties between our two nations”.
On the Indian side, Prime Minister Narendra Modi praised the deal as “ambitious and mutually beneficial,” posting on X that it would “catalyse trade, investment, growth, job creation, and innovation in both our economies”.
Under the new terms, British exports such as whisky, gin, aerospace components, and medical devices will see steep tariff reductions. One of the thorniest issues in earlier negotiations—India’s 150% tariff on whisky—has now been halved to 75%, with further cuts expected over time. High-end UK-made cars, which previously faced tariffs of 100%, will now be taxed at 10%, though a quota will apply.
British consumers are also set to benefit. Tariffs will fall on Indian exports including clothing, footwear, jewellery, gems, and foodstuffs like frozen prawns. “This is a win-win,” said UK Business Secretary Jonathan Reynolds. “The benefits for UK businesses and consumers are massive.”
Indian service providers stand to gain too, with a three-year exemption from social security contributions for staff temporarily relocated to the UK—a provision India’s government lauded as “an unprecedented achievement”.
While some critics voiced concern about this exemption potentially disadvantaging British workers, Trade Minister Douglas Alexander clarified that the arrangement only applies to temporary secondments and does not affect NHS funding, as Indian workers will continue to pay the immigration health surcharge.
Across the business landscape, reactions have been upbeat. Bill Leach of luxury knitwear brand John Smedley welcomed the agreement, saying it would give Indian consumers “greater access to the world’s finest knitwear”.
Premier League Chief Executive Richard Masters also applauded the move, noting India’s vital role in the league’s international growth.
“The continued expansion of UK businesses in India will have a positive impact on our domestic economy.”
Saif Malik of Standard Chartered called the deal “a significant achievement”, noting that it would enable “greater access to one of the world’s largest and most dynamic markets”.
Rain Newton-Smith, head of the Confederation of British Industry, said the deal was “a beacon of hope amidst the spectre of protectionism,” praising its role in defying global trade tensions and reigniting faith in free trade.
Despite the criticism, momentum behind the agreement appears strong. With India poised to become the world’s third-largest economy within years—and the UK seeking to solidify its post-EU trading identity—the pact signals not only economic cooperation, but strategic alignment.
“This agreement is about more than just tariffs,” said former government trade adviser Allie Renison.
“Given India’s size and growth rate, it has the potential to be truly transformational.”
Securing the deal with India ahead of the United States has been hailed as a diplomatic win for Downing Street, underscoring the UK’s renewed global trade ambitions post-Brexit.
Support our Journalism
No-nonsense journalism. No paywalls. Whether you’re in Australia, the UK, Canada, the USA, or India, you can support The Australia Today by taking a paid subscription via Patreon or donating via PayPal — and help keep honest, fearless journalism alive.
