India and the United Kingdom have approved a commercial agreement to reduce the customs tariffs on cosmetics, vehicles, alcoholic beverages and other commodities, as the two sides are looking for victories to compensate for the disruption of President Donald Trump’s protective policies.
Prime Minister Kiir Starmer and his Indian counterpart Narendra Modi expanded the possibility of expanding a trading relationship worth 42.6 billion pounds ($ 57 billion) on Tuesday while announcing the deal – the largest agreement in the United Kingdom since Britain left the European Union and the first with a European economy. Before Starmer, Moody invited to visit India at the “first opportunity” to confirm the agreement, which was the culmination of more than three years of talks under four British prime ministers.
Starmer and Modi seek to isolate themselves from Trump’s commercial wars, even when the knight is separate agreements with Washington to reduce the effect of customs tariffs. However, the agreement is likely to add only about 0.1 % to the economic production in the United Kingdom in the long run, according to Bloomberg Economics accounts.
“Compared to big things like Trump took Bazuka to the global trading system and Brexit, this is small,” said Alan Winters, a commercial expert and professor of Fakhri at the University of Sussex. “It emphasizes the idea that, although NICE is dealing with remote countries is not the issue. Real issues are trade with the European Union and the world order in Donald Trump.”
For India, which Britain crashed as the fifth largest economy in the world in 2021, the deal burns its credentials as an alternative investment destination for China. Britain was keen to show that it had options in the wake of its exit from the European Union, and recently, the Trump tariff. More than 1.9 million people of Indian origin live in Britain, which ruled the Indian subcontinent until 1947.
Starmer praised the deal as a “very important step” and said it would bring benefits to workers all over the country. Moody said on trade, investment, growth, creating job opportunities and innovation in all of our economies. xHe added that an agreement on double pension contributions will come along with the deal.
Mark Taker, head of a group in favor HSBC Holdings PLC said, in a statement that the agreement has “huge future capabilities” for both countries. It is likely that the makers of the souls will be strengthened Diago Pernod, according to Bloomberg Intelligence analysis, which both receive 12 % of their revenues from India.
The UK Ministry of Business and Trade said that Indian consumers will receive cheaper access to British cosmetics, space, lamb, medical devices, salmon, electrical machines, soft drinks, chocolate and biscuits. She said that the British, in turn, could see low prices on clothes, shoes and food products.
The UK said about 90 % of the tariff lines on British exports to India, including 85 %, will be reduced by tariffs during a decade. She said that the whiskey and jinn tariff will decrease to half to 75 % before reducing it to 40 % by the tenth year of the deal, while the car industry tariff will decrease to 10 % – under the shares – from 100 % during that period.
Meanwhile, India won discounts of about 99 % of the tariff lines of the commodities it ships to the United Kingdom, according to a person familiar with the issue. The person said that the southern Asian state also obtained access to the markets for services, including information technology, and it has agreed to a mechanism with the United Kingdom to allow it to search for asylum in the event of exports affected by the rules of carbon emissions in Europe, as the person said, asking not to be identified before the official announcement.
The deal is also the first major free trade agreement signed by the Modi government for a decade and will serve as a launching stone for its ongoing negotiations with the European Union. An email to the Ministry of Commerce was not answered immediately outside the working hours of India.
The main Conservative Party in the United Kingdom immediately seized an exemption from the national insurance payments for Indian workers who reside for a period of less than three years, with the shadow business minister, Andrew Griffiths says on X, “Every time it negotiates the Labor Party, Britain is losing” British workers “.
However, Business Secretary Jonathan Reynolds said that the tax lounge is going in both directions and will ensure that there is no double tax on the British who work temporarily in India or vice versa. Moreover, he added that the UK was only extending to India “arrangements that we have with a full set of current partners.”
Reynolds also said that the deal allows British companies to access Indian government purchasing contracts – which he described as a “exciting opportunity” that puts the country well for the future.
The two countries still need to get rid of legal texts, before submitting the agreement through the local ratification operations for each of them. Reynolds said it expected to take about 12 months to become a valid deal.
The total trade in goods and services between the United Kingdom and India reached 42.6 billion pounds in 2024, according to data from the British government, making India the largest trading partner in the United Kingdom. The UK said it expected the trade deal with India to strengthen bilateral trade by 25.5 billion pounds annually in the long run.
The deal is a welcome boost for Starmer, where he tries to show progress to afrustratedVoters are about its primary goal of raising the anemia growth rate in the United Kingdom. It is the first sealed in the shadow of his government, which came to power 10 months ago, adding to post Brexit deals guaranteed by the previous conservative administration with countries including Australia and New Zealand, as well as Comprehensive and progressive An agreement for the Pacific partnership.
Britain is also holding talks on an agreement with the Trump administration and seeks to obtain closer economic relations with the European Union, its largest commercial partner, after its divorce from the bloc at the end of 2020.
The negotiations were on the United Kingdom and India deal Firing Written by Moody and former Cabinet Director of the United Kingdom, Boris Johnson, in 2021 with his goal conclude to them Diwali In 2022, however, many of the timing dates that were self -imposed as the two sides failed to agree on the main issues.
The talks were suspended last year due to the national elections in both countries, andresumeEarly this year while New Delhi is also racing to take a trade deal with the United States by autumn, which seeks to avoid Trump’s commercial barriers. Asian countries, including South Korea, Japan and India, are leading the race to secure a kind of temporary deal with the Trump administration to obtain a comfort from the customs tariff.
Rin Newton Smith, CEO of the British Federation of Industry, said that the commercial deal with India was “a beacon of hope in the ghost of protectionism.”
This story was originally shown on Fortune.com
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