Starmer and Modi finalize major trade agreement reducing tariffs

In May 2025, British Prime Minister Keir Starmer and Indian Prime Minister Narendra Modi finalized a historic trade agreement, marking a significant advance in the economic relationship between the two nations. This agreement, which follows extensive negotiations that began under former Prime Minister Boris Johnson, aims to reduce tariffs on a variety of goods, enhancing bilateral trade and investment opportunities. The formal signing took place at Chequers, Starmer's country residence, where both leaders expressed their commitment to deepening ties and moving toward collaborative initiatives in trade, defense, and security. The newly signed agreement is projected to cut India's average tariff on British goods from 15% to just 3%, facilitating easier access for British exports including Scotch whisky and automotive products. Whisky tariffs will initially drop from 150% to 75%, and automotive tariffs are set to decrease dramatically from over 100% to 10%. The deal is expected to generate a significant boost to the British economy, projecting investments of approximately £6 billion and the creation of thousands of jobs across the UK. The UK-India trade agreement is considered the largest of its kind in terms of economic impact for Britain, aiming to enhance UK exports into one of the world’s fastest-growing markets. It has been lauded by business leaders who view it as an essential step toward re-establishing Britain’s status as an essential player in global trade following its departure from the European Union. Companies from both nations are anticipated to benefit, with indications of fresh investments and job creation expected in numerous sectors. Despite the positive outcomes presented, challenges and concerns remain. The UK has not achieved the desired level of access to Indian financial services, and discussions continue regarding taxes on high-carbon industries. Moreover, illegal migration and organized crime are areas outlined for further cooperation. The agreement also needs ratification by Britain's Parliament, emphasizing the requirement for additional scrutiny despite its economic aspirations. Overall, the trade deal exemplifies the commitment between the UK and India to foster deeper ties that benefit both economies significantly.