The United Kingdom and India have reached a comprehensive free trade agreement—a milestone in their economic partnership and a new chapter in Britain’s post-Brexit trade strategy.
Announced on May 6, 2025 after three years of negotiations, the deal is set to substantially increase bilateral trade, create jobs, and strengthen ties between two of the world’s largest economies.
The agreement is expected to boost annual trade between the UK and India by £25.5 billion by 2040, representing a 60% increase from 2024 levels when trade totalled £42.6 billion. British exports to India amounted to £17.1 billion last year, while imports from India reached £25.5 billion, making India the UK’s 11th-largest trading partner. The UK government has described this as its most significant bilateral trade deal since leaving the European Union.
Economic forecasts suggest the UK’s gross domestic product will rise by £4.8 billion annually, with wages increasing by £2.2 billion each year in the long term. British companies are projected to save up to £400 million a year in tariffs immediately, with savings potentially rising to £900 million after a decade as tariff reductions are phased in.
A key feature of the agreement is the gradual removal or reduction of tariffs on a wide range of goods. India will eliminate or reduce tariffs on 90% of tariff lines, covering 92% of current UK exports. Tariffs on British whisky and gin, previously as high as 150%, will be halved to 75% immediately and further reduced to 40% over ten years, providing a major boost to the UK’s spirits industry in India, the world’s largest whisky market.
Automotive tariffs imposed by India, which have exceeded 100%, will be cut to 10% under a quota system, initially benefiting internal combustion engine vehicles, with future provisions for electric and hybrid models.
Other British exports such as cosmetics, medical devices, aerospace components, salmon, chocolate, and biscuits will also benefit from tariff reductions, improving their competitiveness in the Indian market. Conversely, the UK will remove tariffs on 99% of Indian imports, facilitating better access for Indian textiles, apparel, electrical machinery, and other goods.
Certain sensitive sectors have been excluded from tariff concessions to protect domestic industries. India has exempted products such as dairy, apples, and cheese from the agreement to safeguard its agricultural sector.
The deal also introduces a Double Contribution Convention, which exempts skilled Indian professionals and their employers from paying UK social security contributions for up to three years. This provision is expected to boost labour mobility and create new opportunities for Indian talent within the UK economy.
This landmark agreement comes amid ongoing global trade tensions, particularly involving the United States, which under President Donald Trump imposed widespread tariffs on imports. Both India and the UK have been seeking to diversify their trade partnerships to reduce reliance on the U.S. market. The new deal is seen as an effort to improve economic resilience and mitigate exposure to external shocks.
Industry reactions have been positive. The UK’s manufacturing, automotive, and spirits sectors anticipate substantial benefits, while Indian exporters in textiles and footwear expect increased sales and employment opportunities. Some Indian beverage producers, however, have expressed concerns over heightened competition from foreign imports.