After three years of negotiation marked by shifting leadership and geopolitical friction, the United Kingdom and India have finally reached a comprehensive trade agreement—an economic milestone that signals a bold new chapter in post-Brexit Britain’s global outreach. Prime Minister Keir Starmer and India’s Prime Minister Narendra Modi finalized the pact in a call that celebrated a strategic alignment between two of the world’s largest democracies. Starmer called it a
“new era for trade and the economy,” while Modi underscored its power to “catalyze trade, investment, growth, job creation, and innovation”
Yet the political reality in Britain may prove more turbulent than the negotiations themselves. The deal, while promising a substantial economic uplift—projected to add £4.8 billion to the U.K.’s GDP by 2040—has already ignited controversy over labor access. In particular, India’s assertion that it secured an “unprecedented” win on exemptions from U.K. employee tax contributions for its professionals has triggered backlash. Starmer’s political opponents, emboldened by recent local election gains by Nigel Farage’s Reform UK, are seizing the opportunity to attack Labour’s stance on migration.
The Labour government, however, has been quick to clarify. The employee tax exemption applies only to temporary company transfers and is capped at three years. An existing visa route, previously unavailable to India and limited to just 1,800 individuals, has now been opened to Indian professionals such as chefs, yoga instructors, and musicians—subject to standard salary and skills thresholds. Still, the optics of migration concessions, even when minor, are politically volatile in Britain’s current climate.
Trade Minister Douglas Alexander addressed Parliament with strong language, promoting the trade deal as the most beneficial terms India has ever agreed to and one that reaffirms the U.K.’s place as a serious player in global commerce. He emphasized that the agreement slashes tariffs across high-demand sectors and signals a revitalized strategic partnership with the world’s fastest-growing major economy.
Among the key components: India’s notoriously steep 150% tariff on Scotch whisky will be halved immediately, and reduced further to 40% over ten years. British-made automobiles, currently subject to a 100% duty, will face just a 10% tariff under the deal. Aerospace, cosmetics, agriculture, medical devices, and electrical machinery are also part of the sweeping tariff reductions. The U.K., in turn, will lower barriers to Indian exports including textiles, seafood, footwear, and select food items.
Despite the celebratory tone, not all goals were met. Negotiators were unable to close a separate Bilateral Investment Treaty, which remains under discussion. Legal reviews of the trade agreement will continue through the coming months, with hopes that Modi and Starmer will formally sign the pact later this year.
This agreement arrives at a time when India’s economic trajectory is nothing short of meteoric. Having overtaken Japan as the world’s fourth-largest economy, India is forecasted to climb to third place by 2028. Modi’s ambition to transform the nation into a developed economy by 2047 lends additional urgency—and symbolism—to the partnership. For the U.K., still recalibrating its global trade footprint post-EU, this deal is as much about prestige as it is about commerce.
The future of the pact now hinges not only on ratification but on the political finesse of its presentation. In economic terms, the deal is transformative. But in an age where migration, identity, and nationalism shape election outcomes, the road from policy to popular support is never straight. The real work—for both governments—may have only just begun.
