The UK-India Trade Deal: Finalising the Enhanced Trade Partnership
Four years after the UK and India unveiled their “enhanced trade partnership”, their vision has finally come to fruition. The landmark UK-India trade deal, estimated to add another £25b to the already £42b bilateral trade value, promises reduced tariffs across a range of commodities.
Although the finer details of the deal are not yet available for public viewing, the initial information indicates that there will be far-reaching benefits for both economies.
In this article, we explore which sectors will look to benefit most and some of the more controversial elements of the deal.
A Deal Years in the Making
The first talks of a trade deal between the UK and India began shortly after Brexit, with former UK Prime Minister Boris Johnson and Indian Prime Minister Narendra Modi sharing their intentions for an enhanced trade partnership in May 2021.
Negotiations formally began in January 2022 and were continued by former Prime Minister Rishi Sunak from October 2022, when he took over from Johnson. Despite a personal connection with Sunak’s Indian heritage and a passionate commitment to the deal, there were sticking points on tariffs, labour, and migration. In the end, both countries agreed to suspend the negotiations whilst they concentrated on general elections.
Whilst Prime Minister Modi remained the leader of India, the UK’s baton was picked up by Prime Minister Keir Starmer in July 2024 – who immediately expressed readiness in building on his predecessor’s work so that the landmark agreement could be made. The negotiations began again in early 2025.
After overcoming 13 rounds of negotiations and multiple obstacles, the UK-India trade deal was announced on the 6th of May 2025 just two days before the United Kingdom agreed the UK-US trade deal.
The deal has been heralded by both nations, being described as “ambitious and mutually beneficial” by Prime Minister Modi.
Bilateral Tariff Benefits
Prime Minister Keir Starmer hailed the UK-India trade deal, stating that it will “deliver for British people and business”.
Although the finer details of the deal remain to be seen, here’re some of the sectors that British importers and exporters will see the benefits in:
UK Exports to India
- Alcoholic Beverages: Tariffs on Scotch whisky and gin, previously at 150%, will be reduced to 75% initially, with further reductions planned over the next decade.
- Automobiles: Import duty on UK cars will be reduced from 100% to 10%.
Other sectors which are tipped to benefit from reduced import duty, both initially and with phased reductions, are cosmetics, food products, and machinery.
UK Imports from India
Already a beneficiary of the Developing Countries Trading Scheme (Generalised System of Preferences in the EU), India has reduced tariffs for many qualifying goods. However, India is also one of the DCTS countries that has many exemptions due to their market share in those sectors.
Under the UK-India trade deal, many of these exemptions will be removed, and preferential origin will be extended to:
- Textiles and Clothing: Currently, clothing, bed linen, and other textiles are subject to approximately 10% duty depending on the goods classification. This will be reduced to 0%.
- Gems and Jewellery: With the elimination of the 5-10% duty and simplified origin rules, India anticipates a growth in jewellery exports to £2.5b over the next two years – double the current value.
- Agricultural Products: Tariffs on foodstuffs such as grapes, mangoes, and rice will be reduced, reducing the cost of importing for British markets.
A Controversial Environmental Concession
The UK has not yet introduced their version of the EU’s Carbon Border Adjustment Mechanism, but India has proactively advised they are not in a position to adhere to environmental standards.
Within the UK-India trade deal is a clause which demands bilateral discussion if a UK CBAM is introduced, and allows for Indian businesses to pursue damages if it impacts them negatively.
The Customs Support Group – Empowering Your UK-India Trade
Providing a full suite of customs services throughout Europe, CSG is here to help you capitalise on the UK-India trade deal. If you’re exploring opportunities born from this landmark agreement, here’s how we can specifically tailor to this trade lane:
- Goods Classification: Gain clarity on whether your commodity will benefit from reduced tariffs or not.
- Transit Clearance: Move your goods through any port the EU without paying duty and VAT.
- UK Customs Clearance: A single point of contact for import and export clearance in any UK air or sea port.
