Prime Minister Narendra Modi and UK Prime Minister Keir Starmer, after signing the India-UK free trade agreement on Wednesday, described the event as a “historic day”, marking a significant deepening of economic and diplomatic ties.
The long-awaited pact, finalised in May after nearly three and a half years of negotiations, is projected to boost the UK economy by £4.8 billion annually and attract £6 billion in bilateral investment. Speaking at Chequers, the prime minister’s official country residence in Buckinghamshire, the two leaders said the agreement signalled a “step-change” in relations.
Modi hailed what he called "a blueprint for our shared prosperity". "On the one hand, Indian textiles, footwear, gems and jewellery, seafood, engineering goods will get better market access in the UK...
"On the other hand, people and industries in India will be able to access products made in the UK, such as medical devices and aerospace parts, at affordable and attractive prices."
Under the agreement, average tariffs on UK goods exported to India will fall from 15 percent to 3 percent. Notably, tariffs on Scotch whisky – a key UK export – will be halved immediately and gradually reduced further in the coming years.
However, the deal must still be ratified by both the British and Indian parliaments – a process expected to take several months.
The UK already imports £11bn in goods from India but the lower tariffs agreed will make Indian exports cheaper, including for components used in advanced manufacturing.
Indian manufacturers are also expected to gain access to the UK market for electric and hybrid vehicles. The pact will make it easier for British companies to sell goods in India.
Whisky tariffs for exports to India have been slashed in half, from 150% to 75%, giving the UK an immediate advantage over international competitors in reaching the Indian market, and the tariff will drop to 40% by 2035.
Negotiations are ongoing over a separate bilateral investment treaty, which would provide greater access for UK financial and legal services firms – a sector many critics say has been underserved in the current deal. British officials have reportedly expressed doubts about a swift conclusion to the investment talks.
India also continues to oppose the UK’s proposed carbon border tax, which aims to level the playing field for domestic producers facing stricter environmental regulations.
The Confederation of British Industry welcomed the signing, stating it “sends a powerful signal that the UK is open for business and remains resolute in its commitment to free and fair trade”.
Modi is expected to meet King Charles and attend a business reception during his UK visit.
