UK and India sign a ‘landmark’ trade agreement after years of tough negotiations

LONDON (AP) — Britain and India announced Tuesday that they have agreed on a hard-wrought free trade agreement that will slash tariffs on products including Scotch whisky and English gin shipped to India and Indian food and spices sent to the U.K.

The deal comes more than three years after negotiations started — and stalled — under a previous British government.

Indian Prime Minister Narendra Modi said on X that the deal was “ambitious and mutually beneficial.” British Prime Minister Keir Starmer called it a “landmark.”

“This is the biggest trade deal that we the U.K. have done since we left the EU, and it’s the most ambitious trade deal that India has ever done,” Starmer said.

The U.K. government said the deal will reduce Indian import taxes on British goods including whisky, cosmetics, medical devices, cars, airplane parts and lamb. Whisky and gin tariffs will be halved from 150% to 75% before falling to 40% by year 10 of the deal. Automotive tariffs will fall from over 100% to 10% under a quota.

India’s Trade Ministry said 99% of Indian exports would face no import duty under the deal, which applies to products including textiles, marine products, leather, footwear, toys, gems and jewelry.

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“This brings us closer to our goal of becoming a global economic powerhouse. It protects our core interests while opening doors to India’s greater participation in global value chains,” Trade Minister Piyush Goyal said.

Modi’s office said the agreement covered trade in both goods and services, and would “unlock new potential for the two nations to jointly develop products and services for global markets.”

Britain said the deal is expected to increase bilateral trade by 25.5 billion pounds ($34 billion) a year from 2040 and add almost 5 billion pounds ($6.7 billion) a year to the British economy.

Mark Kent, chief executive of the Scotch Whisky Association, said the deal would be “transformational” for the industry. India, a country of 1.4 billion people, is the world’s largest whisky market, and Kent said the agreement had “the potential to increase Scotch whisky exports to India by 1 billion pounds over the next five years.”

The issue of visas for Indian nationals was a sticking point in the talks. The British government is under pressure to cut immigrant numbers — pressure heightened by the success of anti-immigrant party Reform UK in local elections in England last week.

Business Secretary Jonathan Reynolds said the trade deal had “no impact on the immigration system,” but made “modest changes to business mobility.”

The agreement adds Indian musicians, chefs and yoga instructors to the groups who can apply for U.K. visas, and includes a three-year exemption from British social security contributions for Indian workers in the U.K. The same exemption will apply to British workers in India.

The deal, which must be ratified by both countries, comes as countries around the world scramble to strike trade deals to make up for tariffs imposed by President Donald Trump on America’s trading partners.

Rain Newton-Smith, chief executive of employers’ organization the Confederation of British Industry, said the trade deal between India and Britain — the world’s fifth- and sixth-largest economies — was a “beacon of hope amidst the specter of protectionism.”

U.K.-India trade negotiations began long before Trump’s re-election. Formal talks began in 2022 on a free trade agreement that then-Prime Minister Boris Johnson hailed as a key goal after Britain’s departure from the European Union in 2020. Johnson famously promised to have a deal done by Diwali in October of that year.

The two countries held 13 rounds of negotiations without a breakthrough before talks were suspended while both nations held general elections in 2024.

Modi was re-elected, and Britain replaced the Conservative government with one led by Starmer’s Labour Party.

The two leaders spoke by phone on Tuesday, and Modi said he had invited Starmer to visit India soon. Starmer’s office said he would go there “at the earliest opportunity.”

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Roy reported from New Delhi.