Britain and India reach agreement on signing free trade agreement

The British and Indian governments announced on May 6 that they have reached an agreement on the conclusion of a free trade agreement (FTA). Negotiations between the two sides began in 2022. Both Britain and India are worried that “Trump tariffs” will lead to a stagnation in free trade, and negotiations are rapidly accelerating towards reaching an agreement.

British Prime Minister Starmer welcomed the agreement, saying that “signing an agreement with India, a fast-growing economy, will benefit British citizens and businesses.” Indian Prime Minister Modi posted on X (original Twitter) that “it will promote trade, investment, economic growth, job creation and innovation between the two countries.”

The British Department of Commerce and Trade said that 90% of tariffs on goods exported from the UK to India will be reduced. There are also many categories that will achieve zero tariffs in stages. Tariffs on whiskey and gin will be halved from 150% to 75%, and reduced to 40% in the medium and long term. Tariffs on cars exceeding 100% will be reduced to 10%.

From India’s exports to the UK, tariffs on products such as clothing, footwear and frozen shrimp will fall.

According to British estimates, by 2040, trade between the UK and India will increase by 25.5 billion pounds and the UK’s GDP will increase by 4.8 billion pounds.

For the UK, which will withdraw from the European Union (EU) in 2020, the UK-India Free Trade Agreement is an important measure of its new trade policy after joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). India has proposed a growth strategy to cultivate domestic manufacturing industries such as automobiles and smartphones and expand exports.

Although more than 10 rounds of consultations have been held since January 2022, progress has been slow and the negotiations were interrupted in 2024 due to the general elections of both sides. In February 2025, after the Trump administration came to power in the United States, British Secretary of State for Business and Trade Jonathan Reynolds and Indian Minister of Commerce and Industry Goyal reached an agreement less than three months after resuming negotiations.