Britain and India on Tuesday announced a “landmark” trade agreement after three years of negotiations, coupling cuts in Indian import duties on UK exports with concessions on the treatment of Indian workers in the UK .
Under the deal, Indian companies posting staff to the UK for up to three years will be exempt from paying the 15% employer national insurance levy, while employees will avoid double contributions reforms India had long sought during talks .
In return, India will halve tariffs on UK whisky and gin from 150% to 75% upon entry into force, before reducing them further to 40% by year ten. Car import duties will drop from over 100% to 10% under a quota system.
Negotiations accelerated after the US imposed sweeping global tariffs, spurring London and New Delhi to deepen ties. Prime Minister Narendra Modi hailed the pact on X as “ambitious and mutually beneficial,” and UK ministers hope it paves the way for similar deals with the US and EU.
The UK government forecasts the agreement will lift GDP by 0.1% by 2040 and increase bilateral trade by £25.5 billion in the long run, with duties amounting to £400 million in annual UK cuts at launch and rising to £900 million after a decade.
While the accord does not alter UK visa thresholds or NHS surcharges for Indian workers, it has drawn criticism from Reform UK and the Conservatives over “subsidising Indian labour.” Labour’s Douglas Alexander defended it as reciprocal and beneficial as India’s services market opens .
The deal mirrors past UK arrangements with Switzerland, Norway and Canada, and seeks to deliver cheaper goods from clothing to prawns to British consumers, even as agricultural tariffs on dairy and milled rice remain unchanged.
Although professional services were expected to feature, legal services were excluded, a “missed opportunity” according to the Law Society. Observers note that full economic benefits will materialise over time as businesses adjust to the new market access.
