Prime minister Sir Keir Starmer confirmed today (6 May) that he had reached an agreement with Prime Minister of India Narendra Modi on a deal which will boost trade between the two countries by an additional £25.5 billion a year by 2040.
The fourth FTA agreed by the UK since Brexit in 2020, the leaders said the deal was the biggest the UK has done since leaving the EU and the most ambitious for India. Modi thanked Starmer for his decisive leadership in getting the deal ‘over the line’.
Indian tariffs will be slashed, locking in reductions on 90% of tariff lines, with 85% of these becoming fully tariff-free within a decade. UK spirits came out a winner, with tariffs on whisky and gin to be halved from 150% to 75% before reducing to 40% by year ten of the deal.
Mark Kent, chief executive of the Scotch Whisky Association, welcomed the ‘transformational’ deal and a landmark moment for Scotch whisky exports to the world’s largest whisky market.
Big boost in turbulent times
“It shows that the UK government is making significant progress towards achieving its growth mission, and the Scotch Whisky industry looks forward to working with the UK and Indian governments in the months ahead to implement the deal, which would be a big boost to two major global economies during turbulent times,” he added.
“The reduction of the current 150% tariff on Scotch Whisky will be transformational for the industry, and has the potential to increase Scotch Whisky exports to India by £1bn over the next 5 years, creating 1,200 jobs across the UK.
“It will also give discerning consumers in India far greater choice of brands, as more SME Scotch Whisky producers have the opportunity to enter the market.”
Diageo chief executive Debra Crew toasted Starmer and Modi’s success in securing the deal.
“It will be transformational for Scotch and Scotland, while empowering jobs and investment in both India and the UK,” she added. “The deal will also increase quality and choice for discerning consumers across India, the world’s largest and most exciting whisky market.”
Expected to take a year to come into force, the deal will see cheaper prices and more choice for Brits on products including clothes, footwear and food products including frozen prawns as UK liberalises tariffs. However, there will be no change in immigration policy, the Government has said.
Keir Starmer said: “We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK’s economy, putting more money in working people’s pockets.
Deliver for British businesses
“Through this government’s stable and pragmatic leadership, the UK has become an attractive place to do business. Today we have agreed a landmark deal with India – one of the fastest growing economies in the world – which will grow the economy and deliver for British people and business.
“Strengthening our alliances and reducing trade barriers with economies around the world is part of our Plan for Change to deliver a stronger and more secure economy here at home.”
As part of the deal, India has agreed to release goods as quickly as possible after arrival at customs, work with the UK on one streamlined portal for trade and publish customs procedures and laws online in English.
Business and trade secretary Jonathan Reynolds added: “This government’s number one mission is growing the economy as part of our Plan for Change so we can put more money in people’s pockets.
“By striking a new trade deal with the fastest-growing economy in the world, we are delivering billions for the UK economy and wages every year and unlocking growth in every corner of the country, from advanced manufacturing in the North East to whisky distilleries in Scotland.
“In times of global uncertainty, a pragmatic approach to global trade that provides businesses and consumers with stability is more important than ever.”
Welcome news
Commenting on the deal, Food and Drink Federation chief executive Karen Betts, Chief Executive said: “This is very welcome news for UK food and drink manufacturers, particularly for soft drinks, chocolates, biscuits, crispbreads and crackers, which will now all benefit from tariff-free access to one of the fastest growing markets in the world.
“The UK exported nearly £300m worth of food and drink to India in 2024, so this FTA represents a significant opportunity for British food and soft drinks.
“The FTA will also provide UK manufacturers with greater access to ingredients produced in India, strengthening the supply chain resilience and competitiveness for our sector. We look forward to working with government to ensure that the full benefits of the agreement are realised across a wide range of UK food and drink manufacturers.”
