Published by Global Banking & Finance Review®
Posted on July 23, 2025
3 min readLast updated: January 22, 2026
Add as preferred source on GoogleThe UK-India trade deal cuts tariffs, boosts investments, and enhances market access, benefiting both economies significantly.
By Manoj Kumar and Alistair Smout
NEW DELHI/LONDON (Reuters) -Britain and India signed a landmark free trade agreement on Thursday during a visit to the UK by Prime Minister Narendra Modi, sealing a deal to cut tariffs on goods from textiles to whisky and cars and allow more market access for businesses.
Here are the key points of the agreement:
TARIFF CUTS
India to reduce tariffs on nearly 90% of UK goods.
Whisky and gin levy to fall from 150% to 75%, then to 40% in a decade.
Automobile tariff to fall from 100%-plus to 10% under quota.
Tariffs to be cut on other goods including cosmetics, medical devices, salmon, chocolates, biscuits.
UK to offer duty-free access to 99% of Indian items, according to Indian commerce ministry, covering nearly 100% of trade value.
India’s average tariff on UK goods will fall from 15% to 3%.
Key reductions include:
*Aerospace: From 11% to 0%
BENEFITS FOR INDIAN SECTORS
Duty-free access for about 99% of Indian exports could unlock $23 billion in new opportunities, said Piyush Goyal, India's trade minister.
Indian exports such as textiles, footwear, gems and jewellery, furniture, auto components, chemicals, machinery, sports goods and other items likely to have zero duties, down from current levels of 4%-16% in the UK.
Indian farmers to get access to the UK's $37.5 billion market.
INVESTMENTS, GDP IMPACT
Nearly £6 billion in investments and export wins announced.
UK GDP projected to rise by £4.8 billion a year.
UK consumers to benefit from cheaper Indian garments, footwear and food items.
MAJOR BUSINESS WINS
Airbus and Rolls-Royce: Over £5 billion in aircraft contracts with Indian carriers.
Carbon Clean: £7.6 million investment in Mumbai innovation centre.
Zerowatt Energy – £10 million investment to set up a UK headquarters.
SERVICES
UK to allow temporary stay of Indian business visitors and contractual service providers, yoga instructors, chefs and musicians.
Nearly 75,000 Indian workers to be exempted from paying social security contributions in the UK for three years.
PUBLIC PROCUREMENT
UK firms to access India's non-sensitive federal government tenders above 2 billion rupees.
The deal will give UK businesses access to India’s public procurement market, comprising about 40,000 tenders with a value of about 38 billion pounds a year, according to UK government estimates.
INDIAN FIRMS TO BENEFIT
Indian textile and apparel manufacturers such as Welspun India, Arvind Ltd, Raymond, Vardhman likely to benefit from duty-free access for exports to the UK.
Footwear manufacturers such as Bata India, Relaxo, auto manufacturers like Tata Motors, Mahindra Electric and also Bharat Forge could benefit, according to industry analysts.
UK COMPANIES TO GAIN
UK firms including whisky distiller Diageo, auto manufacturer Aston Martin and Tata-owned Jaguar Land Rover could benefit from access to fast-growing Indian market.
STRATEGIC PARTNERSHIP
To ramp up joint efforts against organised crime, illegal migration, and agreement on framework for a criminal records sharing agreement.
Sensitive items such as dairy, apples, and edible oils excluded from tariff cuts.
($1 = 86.3790 Indian rupees)
(Reporting by Manoj Kumar; Editing by Hugh Lawson, William Maclean)
Job creation is the process of generating new employment opportunities, often stimulated by economic growth, investments, or new business initiatives.
Economic benefits refer to the positive impacts on a country's economy, such as increased GDP, job creation, and improved trade balances resulting from policies or agreements.
Explore more articles in the Headlines category
