London/New Delhi (Agencies): India and the United Kingdom have finalized a landmark trade agreement after three years of negotiations, marking a significant milestone in economic relations between the two nations. The deal is projected to increase bilateral trade by £25.5 billion ($34bn), raise UK GDP by £4.8 billion ($6.4bn), and boost wages by £2.2 billion ($2.9bn) annually in the long run, according to British government estimates.
A major highlight of the agreement is the reduction of Indian tariffs, locking in cuts across 90% of tariff lines, with 85% of these set to become fully tariff-free within a decade. British industries, particularly alcohol and automotive sectors, are among the biggest beneficiaries. Tariffs on whisky and gin will be halved to 75% before dropping to 40% by year ten of the deal. Automotive tariffs, which currently exceed 100%, will be reduced to 10% under a quota system.
Additional tariff reductions will apply to British exports, including cosmetics, medical devices, aerospace parts, lamb, salmon, chocolate, and biscuits. On the Indian side, 99% of Indian exports to the UK will face no import duties, strengthening India’s access to British markets.
Indian Trade Minister Piyush Goyal welcomed the deal, calling it a step toward global economic leadership. He highlighted that the agreement protects India’s core interests while paving the way for greater integration into international value chains.
A key component of the trade pact is the “Double Contribution Convention,” which exempts Indian workers in the UK from national insurance payments for up to three years, and vice versa for British workers in India.
Negotiations on a separate bilateral investment treaty are ongoing, alongside discussions on labor and environmental standards. India has also sought an exemption from the UK’s forthcoming carbon tax, set to be implemented in 2027, though details remain undisclosed.
The agreement was marked by a phone call between Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer, with Modi extending an invitation for Starmer to visit India.
The deal comes amid global shifts in trade policy, as countries reevaluate economic strategies following tariffs imposed by the Trump administration in the United States. Experts believe the agreement will fortify economic resilience for both nations in a rapidly changing global trade environment.