India-UK Trade Deal To Slash Tariffs, Unlock £6 Billion In Investment

According to a statement from the UK government, India’s average tariff on UK goods will fall sharply — from 15 per cent to just 3 per cent — under the new trade pact

The agreement is also expected to drive significant long-term trade gains

Source : Freepik

India and the United Kingdom are on the brink of formalising a comprehensive Free Trade Agreement (FTA) aimed at strengthening bilateral trade ties, creating jobs, and reducing import duties across sectors. The agreement is scheduled to be signed in the presence of Prime Minister Narendra Modi and his British counterpart, Keir Starmer.

According to a statement from the UK government, India’s average tariff on UK goods will fall sharply — from 15 per cent to just 3 per cent — under the new trade pact. This shift is expected to provide a major competitive edge to British exporters in the Indian market across a wide range of products, including automobiles, medical equipment, cosmetics, and soft drinks.

Whisky, Exports, And New Opportunities

A major beneficiary of the FTA will be the UK’s whisky industry. Current import tariffs of 150 per cent will be halved immediately to 75 per cent, and gradually brought down to 40 per cent over the next decade. This tariff reduction gives the UK a strong advantage in India's lucrative and expanding alcoholic beverage market.

"Our landmark trade deal with India is a major win for Britain. It will create thousands of British jobs across the UK, unlock new opportunities for businesses and drive growth in every corner of the country, delivering on our Plan for Change," said Starmer in the official statement.

The UK government estimates that the agreement will unlock nearly £6 billion in new investments and export deals, leading to the creation of over 2,200 jobs in sectors like aerospace, technology, and advanced manufacturing.

Expanded Access And Long-Term Trade Gains

The agreement is also expected to drive significant long-term trade gains. Projections suggest UK exports to India could rise by nearly 60 per cent, equivalent to an additional £15.7 billion by 2040. Bilateral trade is forecasted to increase by 39 per cent, or £25.5 billion annually, compared to a scenario without the agreement.

Both countries have set an ambitious goal of growing bilateral trade to $120 billion by 2030. The UK currently imports £11 billion worth of goods from India, and reduced tariffs and regulatory simplification are expected to make Indian products more competitive in the UK market.

According to India’s Commerce and Industry Ministry, the FTA ensures near-total market access for Indian exports, with tariff elimination covering 99 per cent of tariff lines — representing nearly 100 per cent of the trade value. Key sectors set to benefit include textiles, footwear, toys, leather, gems and jewellery, auto parts, engineering goods, marine products, and organic chemicals.

Clean Energy And Aviation In Focus

The agreement is also expected to open up India’s public procurement space in the clean energy sector, aligning with India’s ambitious green transition targets. British firms in renewable energy and technology will gain unprecedented access to India’s expanding energy market.

Meanwhile, 26 UK-based companies have already secured new business opportunities in India. Notably, aviation giants Airbus and Rolls-Royce will begin delivering aircraft — many powered by Rolls-Royce engines — to major Indian carriers, as part of 5 billion euro worth of deals. Commerce and Industry Minister Piyush Goyal is currently in London to participate in the signing ceremony.