NEW DELHI/LONDON – The United Kingdom and India have finalized a long-anticipated free trade agreement, signaling a major breakthrough after years of interrupted negotiations and global tariff pressures. Announced on May 6, the pact is expected to significantly boost trade in sectors like whisky, automobiles, and food products, aiming for a £25.5 billion (S$44 billion) increase in bilateral trade by 2040.
Indian Prime Minister Narendra Modi described the deal as “ambitious and mutually beneficial,” while UK Prime Minister Keir Starmer called it a defining step in reducing trade barriers and strengthening international alliances in what he termed “a new era for trade.”
The agreement includes progressive tariff reductions—such as halving India’s steep 150% whisky import duty to 75%, with plans to lower it further to 40% within a decade—and introduces quotas on auto imports. It also opens new procurement opportunities for British companies in India and makes it easier for Indian professionals to work in the UK under streamlined business mobility terms, without altering Britain’s points-based immigration system.
First initiated in January 2022, negotiations had been hampered by political shifts in the UK, including four different prime ministers and elections in both countries. However, talks gained momentum after Labour’s election victory in July 2024, culminating in final ministerial meetings in London last week.
The agreement stands as the UK’s most substantial trade achievement since its exit from the European Union in 2020 and marks a significant step for India in liberalizing access to its traditionally protected markets.
While a bilateral investment treaty remains pending, both nations have signed a social security agreement and committed to continued dialogue on trade and cooperation with the U.S., especially in response to the tariffs imposed under former U.S. President Donald Trump that disrupted global commerce.