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Indian Prime Minister Narendra Modi has finalized a free trade agreement with Prime Minister Sir Keir Starmer, anticipated to provide a multi-billion pound boost to exports.
Under the terms of the agreement, UK cars and whisky will become more competitively priced for export to India, while Indian textiles and jewellery will see similar benefits in the UK market.
The comprehensive deal, the result of three years of negotiations, also includes a new collaborative framework between India and the UK to address illegal migration.
Concerns had been raised by some quarters that the agreement could disadvantage British workers due to extended social security provisions. However, UK Business Secretary Jonathan Reynolds refuted these claims, stating they were “completely wrong” and affirmed that Indian workers on temporary assignment in the UK would receive the same benefits as those already offered to numerous other countries.
Speaking at the signing ceremony held at Chequers, the UK prime minister’s country residence, Sir Keir described the UK-India agreement as “the biggest and most economically significant” trade deal secured by Britain since Brexit.
“This deal is now signed, sealed, delivered,” he declared.
“The UK has been pursuing an agreement of this nature for many years, and it is this government that has successfully concluded it. This sends a powerful signal that Britain is open for business, which is already generating significant confidence.”
Sir Keir added that the agreement is projected to create over 2,200 British jobs nationwide, facilitated by the expansion of Indian firms in the UK and the securing of new business opportunities in India by British companies.
Furthermore, Sir Keir emphasized that the trade deal “is not the extent or the limit of our collaboration with India,” a nation with which the UK shares “unique bonds of history, of family and of culture, and we want to strengthen our relationship further.”
Prime Minister Modi characterized the agreement as “a blueprint for our shared prosperity.”
“On the one hand, Indian textiles, footwear, gems and jewellery, seafood, engineering goods will get better market access in the UK…”
“On the other hand, people and industries in India will be able to access products made in the UK, such as medical devices and aerospace parts, at affordable and attractive prices.”
The UK government has stated that the deal, announced in May following extensive negotiations, is expected to boost the British economy by £4.8bn annually.
The agreement received approval from the Indian cabinet earlier in the week. Ratification by the UK parliament is pending, with an estimated timeframe of at least one year before it comes into effect.
The agreement includes lower tariffs on:
The government also emphasised the benefit to economic growth and job creation from UK firms expanding exports to India.
UK exports that will see levies fall include:
The UK already imports £11bn in goods from India but the lower tariffs agreed will make Indian exports cheaper, including for components used in advanced manufacturing.
Indian manufacturers are also expected to gain access to the UK market for electric and hybrid vehicles.
Average tariffs for UK exports to India will drop from 15% to 3%, making it easier for British companies to sell goods in India.
Whisky tariffs for exports to India have been slashed in half, from 150% to 75%, giving the UK an immediate advantage over international competitors in reaching the Indian market, and the tariff will drop to 40% by 2035.
The two prime ministers have also agreed on closer collaboration around defence, education, climate, technology and innovation.
Enhanced intelligence sharing and operational collaboration will also assist in tackling corruption, serious fraud, organised crime, and irregular migration.
This includes finalising a new sharing agreement for criminal records, which will assist court proceedings, help maintain accurate watchlists, and enable the enforcement of travel bans.
The deal has not given the UK as much access as it would have liked to India’s financial and legal services industries, and talks continue on a bilateral investment treaty aimed at protecting British investments in India and vice versa.
The two nations also continue to discuss UK plans for a tax on high-carbon industries, which India believes could hit its imports unfairly.
The Indian government welcomed an extended exemption on national insurance contributions, calling this “an unprecedented achievement” when the deal was agreed in May.
The agreement means staff from Indian companies who are temporarily transferred to the UK, and staff from UK firms who are temporarily working in India, will only pay social security contributions in their home country, rather than in both places.
However, the UK government stressed we already have similar reciprocal “double contribution convention” agreements with 17 other countries including the EU, the US and South Korea.
Responding to suggestions the deal meant British workers could be undercut by cheaper Indian workers, Reynolds told BBC Breakfast: “I can categorically tell you that is not the case.
“There is no tax advantage for hiring an Indian worker over a British worker.”
Extra costs for visas and the NHS surcharge would mean “you’d actually pay more for an Indian worker”, he said, adding “no-one is being undercut”.
BBC News understands the Prime Minister raised the case of a Scottish Sikh activist in prison in India during talks with the Indian prime minister earlier today.
Jagtar Singh Johal was arrested in 2017 accused of terrorism offences but hasn’t been convicted of any crime.
His family and legal team have been pushing the UK government to secure his release through diplomatic channels, although the Indian government has always maintained due process in being followed.
Today’s visit is Modi’s fourth to the UK since he became India’s prime minister in 2014.
The latest deal comes a year after the UK-India Technology Security Initiative was signed by Modi and Foreign Secretary David Lammy, allowing joint work on telecoms security and emerging technologies.
Negotiations on the trade deal have taken three years, having been started by former PM Boris Johnson in 2022.
Conservative shadow business secretary Andrew Griffith claimed the trade deal had only been made possible “because of Brexit delivered by the Conservatives” and was “a step in the right direction”.
But he added: “The irony should not be lost on anyone that any gains from this trade deal will be blown out of the water by [Deputy Prime Minister] Angela Rayner’s union charter, stifling business with red tape, the jobs tax and, come autumn, Rachel Reeves’ inevitable tax hikes that will punish Britain’s makers just to reward those who do not contribute.”
However, Liberal Democrat foreign affairs spokesperson Calum Miller said Brexit was what had hindered UK jobs and growth and called for a new UK-EU customs union.
“We support the opening of trade, which is vital in the face of the tariff wars launched by Donald Trump,” he said.
“But the gains from this deal are a small fraction of what the government could deliver for jobs and growth from a better deal with the EU.
“The government needs to cut the mountains of red-tape – ushered in by the Conservatives’ botched deal – that currently holds up trade with the EU.”
Ben Stokes leads England’s attack against India as he finishes with figures of 5-72 in their first innings, with the tourists bowled out for 358 on day two of the fourth Test at Old Trafford.
India wicketkeeper Rishabh Pant returned to bat despite his foot injury on day two of the fourth Test against England but will not keep wicket for the rest of the match.
England’s Jofra Archer bowls Rishabh Pant for 54 to end his ‘brave’ innings after the India vice-captain returned to bat for India, just a day after retiring hurt with a serious foot injury in the fourth Test at Old Trafford.
England captain Ben Stokes removes Washington Sundar for 27 and Anshul Kamboj for a duck in the same over to pick up five wickets in total in India’s first innings of the fourth Test at Old Trafford.
Former India cricketer Deep Dasgupta reacts to Rishabh Pant’s return to batting, less than 24 hours after being retiring injured on day one of their fourth Test against England at Old Trafford.
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