UK and India conclude trade agreement - Trade Treasury Payments

The United Kingdom and India have signed a trade agreement projected to unlock £6 billion in value, the most consequential bilateral trade accord for the UK since its departure from the European Union.

Finalised during Indian Prime Minister Narendra Modi’s official visit to Chequers, the UK Prime Minister’s country residence, the agreement is the product of three years of protracted negotiations. This is Modi’s fourth visit to the UK since assuming office in 2014. 

Prime Minister Sir Keir Starmer described the deal as a landmark moment. “The UK has been negotiating a deal like this for many years, but it is this government that got it done,” he said. “It sends a clear signal that Britain is open for business.”

At the centre of the agreement are wide-ranging tariff reductions designed to lower market barriers and support cross-border investment. For British exporters, average tariffs on goods entering India will fall from 15% to 3%, with immediate gains for high-profile sectors such as automotive, aerospace, and spirits. The whisky industry, long burdened by a 150% import duty into India, stands to benefit from a staged reduction to 75% immediately and 40% by 2035.

Other UK exports set to benefit from duty reductions include electrical goods, medical devices, cosmetics, salmon, lamb, and high-value confectionery.

In parallel, Indian exports will get improved access to the UK market across textiles, footwear, seafood, jewellery, and engineering goods. Provisions have also been made for Indian electric and hybrid vehicles to enter the UK market under preferential terms.

The agreement is subject to parliamentary approval in the UK and is expected to come into force in 2026.

Government estimates suggest the agreement could add £4.8 billion annually to the UK economy, while supporting over 2,000 jobs across multiple regions. 

The agreement also includes commitments to closer operational cooperation on serious crime, corruption, fraud, and irregular migration. A forthcoming data-sharing pact covering criminal records and watchlists is expected to improve enforcement capabilities on both sides.

Notably absent from the final agreement is deeper UK access to India’s financial and legal services markets, long-standing priorities for UK negotiators. Talks on a standalone bilateral investment treaty to strengthen protections for cross-border capital flows are ongoing.

The two countries also remain at odds over the UK’s proposed carbon border adjustment mechanism, which India argues could disproportionately affect its exports. 

The deal has also entered the domestic political narrative. Conservative shadow business secretary Andrew Griffith claimed the agreement was only made possible “because of Brexit delivered by the Conservatives,” but warned that its benefits could be undercut by Labour’s domestic economic policies. “The irony should not be lost on anyone,” he said, “that gains from this deal may be cancelled out by red tape and taxation elsewhere.”

Negotiations began in 2022 under Boris Johnson and spanned three UK prime ministers.