India and UK Strike Bilateral Trade Deal That Boosts Access and Eases Restrictions

The landmark agreement lowers tariffs on items such as whiskey, advanced manufacturing parts, lamb, salmon, chocolates, and biscuits.

British Prime Minister Sir Keir Starmer (L) during a bilateral meeting with Indian Prime Minister Narendra Modi at the G20 summit at the Museum of Modern Art in Rio de Janeiro, Brazil, on Nov. 18, 2024. Stefan Rousseau/PA Wire

India and the United Kingdom have finally agreed on a trade deal that has been in negotiations for years.

The landmark deal with its old colonial possession represents Britain’s most significant post-Brexit agreement.

The deal, between the world’s fifth and sixth-largest economies, took three years of fitful negotiations.

The aim was to increase bilateral trade between London and New Delhi by a further 25.5 billion pounds ($34 billion) by 2040, with liberal market access and relaxed trade restrictions.

“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,” Indian Prime Minister Narendra Modi said on social media platform X.

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

The deal lowers tariffs on goods such as whisky, advanced manufacturing parts, and food products such as lamb, salmon, chocolates, and biscuits, as well as agreeing on quotas on both sides for auto imports.

The deal lowers Indian tariffs, some of the world’s highest, on a number of British products sold in the country.

Whisky and gin tariffs will be halved from 150 percent to 75 percent, before dropping to 40 percent by the 10th year of the deal, benefiting Scotland’s Scotch industry and making the beverage cheaper in whisky’s largest market.

India will also slash automotive tariffs to 10 percent under a quota from the more than 100 levies currently in place.

Among other British goods facing lower levies are cosmetics, medical devices, electrical machinery, soft drinks, and chocolate.

In turn, UK tariffs have been cut on Indian clothing, footwear, and food products, including frozen prawns.

It also covers rules of origin regulations, giving manufacturers access to lower tariffs even if they use inputs from other places.

And the agreement includes provisions on the services sector and procurement, allowing UK companies to compete for more contracts in India.

Additionally, the deal will see the two countries strike a “double contribution convention,” highlighted by New Delhi’s Trade Minister Piyush Goyal on X, which means Indian workers temporarily in the UK will not pay national insurance contributions for three years, with the same applying to British workers in India.

India, the world’s most populous country, has a population of more than 1.4 billion, and, according to the most recent census data in Britain, some 3 percent of people in England and Wales were recorded as having Indian ethnicity.

“We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK’s economy,” British Prime Minister Keir Starmer said.

“Strengthening our alliances and reducing trade barriers with economies around the world is part of our plan for change to deliver a stronger and more secure economy here at home.”

Following the announcement, it was also revealed that Starmer has accepted an invitation from Modi to visit India.

“Prime Minister Modi extended an invitation to India, which the Prime Minister was pleased to accept and said he looked forward to visiting India at the earliest opportunity,” a Downing Street spokesperson said.

The pact marks India’s opening up of its long-protected markets, including cars, setting an early example for the country’s likely approach to dealing with other Western powers such as the United States and the European Union.

Talks between New Delhi and London were initiated in January 2022 and became a symbol of Britain’s hopes for its independent trade policy after leaving the European Union.

But negotiations were stop-start, with Britain going through four prime ministers, and elections being held in both countries in 2024.

The most recent round of talks was restarted in February by the UK’s Labour government.