Prime Minister Sir Keir Starmer and his Indian counterpart, Narendra Modi, have signed a landmark £6 billion free trade agreement, boosting exports and deepening economic ties between the United Kingdom and India.
Under the agreement, UK products such as cars, whisky, lamb, gin, medical devices, and aerospace components will be cheaper to export to India, while Indian textiles, jewellery, and electric vehicles will enter the UK at reduced costs. The deal, which took three years of negotiation, also includes a new bilateral plan to tackle illegal migration and enhance cooperation in defence, education, and technology.
Speaking at the official signing ceremony held at Chequers, the UK prime minister’s country residence, Starmer declared: “This deal is now signed, sealed, delivered. I’m really pleased and privileged to welcome you here today on what I consider to be a historic day for both of our countries, and the delivery of the commitment that we made to each other.”
He said the agreement would create over 2,200 British jobs and expand opportunities for UK firms operating in India. “Our landmark trade deal with India is a major win for Britain,” Starmer stated, noting that it would benefit engineers, technicians and supply chain workers, particularly in the aerospace, technology and advanced manufacturing sectors.
“We’re putting more money in the pockets of hardworking Brits and helping families with the cost of living, and we’re determined to go further and faster to grow the economy and raise living standards across the UK,” he added.
The UK government estimates the deal will increase the British economy by £4.8 billion annually. While the Indian cabinet has already approved it, the agreement still requires parliamentary ratification and is not expected to come into effect for at least a year.
Key tariff reductions include cuts on clothing, footwear, frozen prawns, gems, and cars. Whisky tariffs to India have dropped from 150% to 75%, and will further decline to 40% by 2035. Meanwhile, average tariffs on other UK exports will fall from 15% to 3%.
Indian manufacturers will gain easier access to the UK market, particularly for electric and hybrid vehicles. The government emphasised that the agreement will stimulate job creation and business expansion through improved market access for both sides.
The deal also introduces a new criminal records sharing framework to aid prosecutions, enhance watchlists, and support travel ban enforcement. Enhanced intelligence sharing will target corruption, serious fraud, organised crime, and irregular migration.
However, the UK did not secure as much access as hoped to India’s financial and legal services markets. Talks continue on a proposed bilateral investment treaty and on carbon tax concerns raised by India.
One of the more contentious provisions extends national insurance exemptions for Indian and British workers temporarily assigned abroad. Indian officials have hailed this as “an unprecedented achievement.” Critics warned the clause could undercut local labour, but Business Secretary Jonathan Reynolds rejected those claims.
Reynolds told BBC Breakfast: “I can categorically tell you that is not the case. There is no tax advantage for hiring an Indian worker over a British worker.” He added that visa and NHS surcharge fees would make hiring overseas staff more costly: “No-one is being undercut.”
The UK currently has similar social security arrangements with 17 countries, including the US, EU member states, and South Korea.
This is Prime Minister Modi’s fourth visit to the UK since taking office in 2014. His trip follows last year’s UK-India Technology Security Initiative, which established new cooperation in telecoms and emerging tech fields.
Negotiations on the trade agreement began in 2022 under then-Prime Minister Boris Johnson. Shadow Business Secretary Andrew Griffith credited Brexit for enabling the deal, stating: “This trade deal has only been made possible because of Brexit delivered by the Conservatives.”
However, Griffith warned the benefits could be undone by Labour’s domestic economic policies: “The irony should not be lost on anyone that any gains from this trade deal will be blown out of the water by Angela Rayner’s union charter… and Rachel Reeves’ inevitable tax hikes that will punish Britain’s makers just to reward those who do not contribute.”
Faridah Abdulkadiri
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