Unpacking the UK-India Trade Deal

8 May 2025

 

The British and Indian governments announced a major trade deal on 6 May – the UK’s largest since it left the EU.  Here are some of the highlights:

  • Overall, 90% of UK tariff lines will be reduced under the deal; 64% become tariff-free immediately, and 85% becoming tariff-free within a decade.
  • India has halved tariffs on British whisky and gin, 150% to 75%; they will fall to 40% by year ten of the deal.
  • India’s tariffs on UK automotives will fall from 100% to 10%; this applies to vehicles with IC engines first, and a quota will be applied.
  • India has also reduced tariffs on UK electrical machinery, aerospace components, cosmetics, lamb, medical devices, salmon, soft drinks, chocolate and biscuits.
  • 99% of export from India to the UK will benefit from zero duty. British shoppers could see cheaper prices and more choice on products including clothes, footwear, and food products including frozen prawns as the UK liberalises tariffs.
  • Indian employees working in the UK will be exempt from social security payments for three years.
  • The UK and India will identify and encourage relevant UK and Indian bodies to negotiate mutual arrangements for recognition of professional qualifications.
  • Barriers to digital trade will be reduced. There are specific provisions regarding: recognition of electronic contracts; preventing forced transfer of source code; cross-border data flows; and data localisation.
  • UK businesses will have new access to an estimated £38 billion of tender opportunities in India, covering goods, services and construction. 
  • CBAM is not addressed in the FTA – India sought exemption from UK CBAM on the grounds that it is “developing country”. Negotiations between the two parties are continuing, regarding this aspect of trade.

The government has assessed that “The UK has secured the best deal that any country has ever agreed with India”, and that the FTA will increase UK GDP by £4.8 billion annually, and bilateral trade by £25.5 billion annually.

The deal has been welcomed by business leaders, including British Chambers of Commerce.

India represents one of the most dynamic and exciting economies in the world, and has the highest growth rate in the G20, expected to remain above 6% over at least the next 5 years.  The UK government states that: “All this growth presents significant opportunity for UK businesses. As India grows, so will the number of consumers looking to purchase high-quality UK goods and services. By 2030, India’s middle class will number an estimated 60 million and rising, potentially reaching a quarter of a billion by 2050. India’s overall demand for imports is projected to grow by 144% in real terms between 2021 and 2035, reaching £1.4 trillion.”

Contact us for further information about trading goods with India.

 

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