The United Kingdom and India announced a bilateral trade agreement Tuesday, lowering import taxes on various goods. The deal comes as the United States is increasing tariffs globally.
British Secretary of State for Business and Trade Jonathan Reynolds met Indian Minister of Commerce and Industry Piyush Goyal for trade talks in London, culminating in the agreement. It marks the first trade deal struck under UK Prime Minister Keir Starmer's government.
The UK government forecasts the agreement could increase trade between the two nations by £25.5 billion ($34.1 billion) annually. This represents a projected 60% rise from the 2024 trade level, according to UK data.
Under the pact, India will decrease tariffs on items such as UK whisky, automobiles, medical devices, advanced machinery, and lamb. Many of these levies are set to be eliminated entirely over the next decade. The United Kingdom, in turn, will reduce tariffs on most Indian products.
The British government said that 99.1% of imports from India will become tariff-free in the UK as soon as the agreement takes effect. The deal is considered the largest and most economically impactful bilateral trade agreement the UK has completed since leaving the European Union in 2020.
Indian Prime Minister Narendra Modi posted on X that the deal would "deepen" the relationship, calling it a "historic milestone" that includes a Double Contribution Convention. This convention will exempt Indian workers temporarily in the UK from paying national insurance for up to three years.
The agreement is being finalized amidst rising global trade tensions. US President Donald Trump has imposed new tariffs, leading to reciprocal actions from many countries and stalled trade negotiations with potential partners, including India.
Keir Starmer stated the deal would "grow the economy and deliver for British people and business." He added, "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."
Keshav R. Murugesh, chief executive of NYSE-listed WNS, commented that the timing was opportune, noting the pact "enhancing the economic resilience of both the UK and India by providing access to new markets and reducing vulnerability to external shocks."
