Whisky tariffs cut, textile exports eased, and new security cooperation included in landmark FTA.
New Delhi, July 24, 2025
In a significant development following years of negotiations, India and the United Kingdom have secured a free trade agreement that is expected to increase annual bilateral trade by £6 billion. Indian prime minister Narendra Modi and UK prime minister Keir Starmer signed the deal on Thursday, which constitutes a considerable strategic economic and diplomatic reach for both nations.
“The recognition here is that we are releasing UK whisky exports – all tariffs will be reduced from 150% to 75%. This has been a long-standing issue for UK distillers. It also means more tariff reduction for Indian textile and jewellery exporters and it will reduce the costs to access the UK market,” said their government commentator.
The agreement notes that UK exporters of electric vehicles, premium goods and aerospace exports will see average Indian tariffs of 15% come down to just 3%, ultimately helping with development in UK tech, and manufacturing sectors. The agreement is expected to support more than 2,200 jobs created in the UK.
In addition to trade, the FTA adds a new security framework with an emphasis on illegal migration through better data-sharing on criminal records. But there is a significant provision that has attracted criticism because it allows Indian workers assigned in the UK for less than a year to be exempt from double social security payments, for as long as three years which some claim creates an unfair cost advantage for Indian workers. UK Business Secretary Jonathan Reynolds defended the clause, citing similar provisions in over 50 other trade deals.
The agreement, already approved by India’s cabinet, still awaits parliamentary approval in both countries and is expected to take effect within a year. Currently, unresolved questions remain over a separate investment treaty and the UK’s carbon tax, which India believes will be detrimental to its exporters.
For Keir Starmer, it is a deliverable with the promise made after Brexit to establish trade relationships with high-growth economies. For Narendra Modi this delivers access to an expanded market for Indian goods, while making India a credible player in the future of global trade diplomacy.
