Britain and India seal historic trade deal reducing tariffs on key products

On Thursday, July 24, 2025, the prime ministers of Britain and India, Keir Starmer and Narendra Modi, finalized a trade agreement aimed at enhancing economic collaboration between the two nations. This agreement seeks to lower tariffs significantly on several products, including Scotch whisky and Indian spices, promoting a more favorable trade environment. The formal signing took place at Chequers, the British leader's official country residence, and was attended by key trade ministers from both countries. Starmer characterized this deal as the most economically significant trade agreement Britain has achieved since exiting the European Union in 2020, emphasizing its potential to strengthen bilateral relations further. Modi echoed this sentiment, declaring the day as historic for India-UK relations, showcasing the mutual commitment towards bolstering trade ties. Besides tariff reductions, the two leaders also announced nearly £6 billion worth of investments in sectors like artificial intelligence, aerospace, and dairy products, along with coordinated efforts in defense, migration, climate, and health matters. The trade deal, initiated in May 2025, had been a long-term goal, as discussions began more than three years prior, stalling under the previous Conservative government's administration. The process resumed after general elections in both nations, resulting in a re-elected Modi and a Labour government led by Starmer in Britain. Generally, 99% of Indian exports are expected to be duty-free under this agreement, highlighting a significant step towards liberalizing trade between the two nations. The UK government anticipates that this agreement will lead to a £25.5 billion increase in bilateral trade annually by 2040 and generate nearly £5 billion a year to the British economy. Importantly, tariffs on many goods are also set to drop considerably over the years, with India reducing its average tariff on British goods from 15% to 3%. Tariffs on whisky and gin will reduce from 150% to 75% initially before being further cut to 40% within ten years. Automotive tariffs will also see reductions from over 100% to 10% based on a quota system, making British products more competitive in the Indian market. As cricket matches are currently being played between England and India, both leaders even made a light-hearted analogy of their partnership to cricket, with Modi stating that while there may be challenges, the intent to build a strong, enduring partnership persists. Starmer’s remarks emphasized the historical and cultural connections between the two nations and the objective to further strengthen their relationship moving forward.