UK and India Sign Landmark Trade Deal Amid U.S.-Led Tariff Tensions

The United Kingdom and India have signed a landmark bilateral trade agreement, reducing tariffs on key exports such as UK whisky and cars, at a time when global trade tensions, driven by the United States, are escalating.

According to the British government, India will gradually lower taxes on imports from the UK, with the majority of traded goods becoming “fully tariff-free within a decade.” Notably, tariffs on UK whisky and gin will be slashed from 150% to 75%, and further down to 40% over the next ten years. Many automotive tariffs will also drop dramatically from over 100% to just 10%.

A Strategic Agreement in the Midst of Global Trade Tensions

The deal comes as trade tensions rise worldwide, with U.S. President Donald Trump imposing steep tariffs on imports, straining ties with both allies and rivals. The UK government estimates the agreement will boost bilateral trade by £25.5 billion ($34 billion). Trade between the two nations reached £42.6 billion in 2024, marking an 8.3% increase from the previous year.

By the end of 2024, the UK reported a £8.4 billion trade deficit with India in goods and services. India remains the UK's 11th-largest trading partner.

First Trade Deal Under Prime Minister Kier Starmer

This is the first trade agreement signed under UK Prime Minister Kier Starmer’s leadership. “Today we have agreed a landmark deal with India—one of the fastest-growing economies in the world—that will drive economic growth and benefit British people and businesses,” Starmer said in a statement.

“Strengthening alliances and removing trade barriers with global economies is a key part of our Plan for Change to build a stronger and more secure economy at home,” he added.

Indian Prime Minister Narendra Modi posted on X that the deal will “deepen” the bilateral relationship. “In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention,” Modi stated.

“These landmark agreements will further strengthen our Comprehensive Strategic Partnership, and catalyze trade, investment, growth, job creation, and innovation in both economies,” he added.

Boosting Economic Resilience

The agreement comes at a pivotal time amid rising global trade uncertainty. Keshav R. Murugesh, CEO of WNS and chairman of the Confederation of Indian Industry UK Business Forum, remarked: “The timing couldn’t be better. This FTA enhances the economic resilience of both the UK and India by opening new markets and reducing exposure to external shocks.”

“This is crucial in a world where trade tensions continue to rise,” Murugesh added.

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