Aylesbury, England – July 24: The British Prime Minister Keir Starrer and Prime Minister Narendra Modi of India Walk on July 24, 2025 in Aylesbury, England.
Kin Cheung | Getty Images News | Getty pictures
The bilateral trade in Great Britain and India will receive an annual increase in more than 34 billion US dollars in the long term, with the leaders of the federal states describing it as a “historical” deal.
The FTA, which affects the duties for goods such as textiles, alcohol and automobiles, was signed on Thursday in the presence of the Indian Prime Minister Narendra Modi and his British counterpart Keir Starrer.
Both sides had completed the trading pact in May after three years of intensive negotiations – characterized by thorny questions such as visas, tariff reduction and tax breaks. The conversations were accelerated by dynamics and both governments to seal the deal when the customs threats of US President Donald Trump disregarded the world.
The agreement between the fifth and sixth largest economies in the world is expected to increase its bilateral trade by £ 25.5 billion a year by 2040. The trade in goods and services in 2024 was over £ 40 billion.
The deal offers “great advantages for our two countries”, increase wages, increases the standard of living and lowered the prices for consumers, said Starrer.
India's modes praised the agreement as a “blueprint for our common prosperity” and emphasized how Indian goods such as textiles, jewelry, agricultural products and technical articles would benefit from better access to the British market.
As part of the deal, 92% of the goods exported by Great Britain to India are either completely or reduced, while 99% of the Indian goods sent to Great Britain are released from tariffs.
The trade pact in Great Britain was a “strategic victory” for trade diplomacy in Neu -Delhi, since it brings targeted advantages to the Indian goods that were previously faced with high tariffs or regulatory barriers, said Dhiraj Nim, economist at Anz Bank.
The British government estimates that its exports to India would be reduced from 15% to 3%. The agreement must still be ratified according to the parliaments of both countries, a process that can take several months.
In addition to reducing tariffs for a large number of products, the agreement frees Indian temporary workers in Great Britain and their employers from the payment of social security contributions for three years.
The tariffs on Great Britain Scotch and gin will be halved from 150% to 75% and continued to decrease to 40% in the next decade, while the tariffs are initially reduced to Brandy and Rum to 110% and land at 75%.
The auto industry is reduced the tasks within five years according to a quota system from up to 110% to 10%.
Before the deal, the British goods in India received an average service of 14.6%, and the corresponding number for Indian goods was 4.2%.
This is one of the first trading agreements signed by India with an advanced economy, according to Chakraborty, and found that Great Britain lasts 3% of the total goods in India last year, with a majority being machines and equipment, followed by textile and shoes.
Since the deal offers the Indian sectors such as textiles, gemstones and jewelry, it will also support employment and industrial growth in India, said NIM.
India's trade surplus with Great Britain has expanded significantly in the past two years and, according to NIM, could continue to grow at short notice if market access improves. Over time, the gradual loosening of the British export barriers – especially in the case of automotive, alcoholic beverages and machines – can help to narrow down the gap.
“It is difficult to say in which direction the surplus would go,” said Nim, although the entire trading volume will surely increase.
Mutual victories
The trade agreement could strengthen the position of both countries in their respective ongoing negotiations with trading partners, including the USA, said analysts.
The British contract brought both “lever against the USA,” said Alicia Garcia Herrero, chief economist at Natixis Bank.
London continues to work to interweave the trading pact he agreed with the United States in May, and before a potential meeting between Starrer and Trump on Friday during a personal trip of the US president to Scotland.
The deal with India is intended to increase British economic output by a further £ 4.8 billion ($ 6.5 billion) per year and raise its gross domestic product, which was £ 2.85 in 2024.
For modes, the trade agreement will probably serve as a springboard for India's ongoing discussions with other developed economies and its push of positioning its country as a sustainable trading partner, according to experts.
The deal with Great Britain is “all western powers that … we are ready to act on our conditions. And it is a big voice, a great support that was provided with this agreement” SameP Shastri, Vice President of the Chamber of Commerce of Brics and Industry, said in India in India on Friday.
Neu -Delhi plays a contract with Washington before August 1, as a higher US tariff of 26%.
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