London UK, July 24, 2025 — A free trade agreement worth £6 billion has been officially signed by UK Prime Minister Sir Keir Starmer and Indian Prime Minister Narendra Modi. The deal, the result of three years of negotiations, aims to significantly boost exports for both countries by reducing tariffs across various goods and includes a new framework to address illegal migration.
Under the new terms, UK cars and whisky will become more affordable to export to India, while Indian textiles and jewelry will benefit from reduced tariffs for export to the UK. The UK government anticipates that the agreement will contribute an additional £4.8 billion annually to the British economy and create over 2,200 British jobs as businesses in both nations expand their operations.
Speaking from Chequers, the Prime Minister's country residence, Sir Keir described the agreement as "the biggest and most economically significant" trade deal for Britain since Brexit. He declared the deal "signed, sealed, delivered," emphasizing that it sends "a powerful message that Britain is open for business."
Prime Minister Modi also praised the agreement as "a blueprint for our shared prosperity." He highlighted that Indian products such as textiles, footwear, gems, and seafood will gain improved access to the UK market, while Indian consumers and industries will be able to access UK-made goods like medical devices and aerospace parts at more competitive prices.
Economic Impact and Tariff Reductions
The agreement, initially announced in May, is pending ratification by the UK Parliament and is expected to take at least a year to become effective. It features lower tariffs on a range of imports, including:
Clothing and shoes
Cars
Food, including frozen prawns
Jewellery and gems
Conversely, UK exports that will benefit from reduced levies include:
Gin and whisky (tariffs on whisky exports to India are set to drop from 150% to 75%, further decreasing to 40% by 2035)
Aerospace, electricals, and medical devices
Cosmetics
Lamb, salmon, chocolates, and biscuits
Luxury cars
Overall, average tariffs for UK exports to India are projected to fall from 15% to 3%.
Migration and Social Security Provisions
A key element of the deal is a new India-UK initiative to combat illegal migration. This is supported by enhanced intelligence sharing aimed at tackling corruption, serious fraud, organized crime, and irregular migration, including a new agreement for sharing criminal records.
Concerns raised by opposition parties regarding the potential for the deal to undercut British workers due to extended social security terms were addressed by UK Business Secretary Jonathan Reynolds.
He clarified that Indian workers on temporary secondment to the UK would receive the same terms offered to other countries. Reynolds stated there would be "no tax advantage for hiring an Indian worker over a British worker," noting that additional costs for visas and NHS surcharges would actually make an Indian worker "pay more for."
The agreement also includes an extended exemption on national insurance contributions for temporarily transferred staff, meaning they will pay social security contributions only in their home country. The UK government underscored that it has similar reciprocal agreements with 17 other nations, including the EU and the US.
Ongoing Discussions and Political Responses
While the trade deal marks a significant milestone, discussions are continuing on further access for the UK's financial and legal services industries in India.
Negotiations are also ongoing for a bilateral investment treaty to protect investments between the two countries, as well as addressing the UK's proposed tax on high-carbon industries, which India views as potentially unfair to its imports.
The signing of the deal follows three years of negotiations, which were initiated by former Prime Minister Boris Johnson in 2022. Conservative shadow business secretary Andrew Griffith attributed the agreement's realization to "Brexit delivered by the Conservatives," calling it "a step in the right direction."
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