![\"A](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/05\/\/b3443b59-db2c-4d7b-8c28-2aa6c1454fca.jpg\")
<\/p>\nBritain has struck a \u00a35 billion-a-year free-trade agreement with India after offering a controversial tax break to Indian workers and companies. <\/p>\n
The agreement, which is the biggest involving trade since Brexit, will result in Indian taxes on British exports such as whisky and cars falling by up to 90 per cent.<\/p>\n
But to reach the agreement ministers conceded to demands to exempt Indian workers and companies from paying national insurance contributions for up to three years on staff seconded to the UK.<\/p>\n
The Indian government said the move would result in \u201csignificant financial gains\u201d for Indian companies, which would \u201cenhance their competitiveness in the UK market\u201d and \u201cbenefit large numbers of Indians working in the UK\u201d.<\/p>\n
The Tories accused Sir Keir Starmer of signing up to a \u201ctwo-tier tax system\u201d by raising taxes for British businesses while giving an exemption to Indian migrants.<\/p>\n
Nigel Farage, the Reform leader, claimed the deal was a \u201cbetrayal\u201d of British workers, because it would mean that employing Indian workers in the UK was 20 per cent cheaper.<\/p>\n
<\/p>\n
The British whisky industry will benefit<\/p>\n
LEON HARRIS\/GETTY IMAGES<\/p>\n
However, ministers defended the concession, which is expected to cost the Treasury more than \u00a3100 million, saying it had been \u201cconsidered as part of the balance of the deal\u201d. They added that the deal was similar to agreements that the UK had with other countries, including Europe and the United States, and would also benefit British workers in India.<\/p>\n
Under the terms of the agreement India has agreed to reduce taxes on 90 per cent of British exports \u2014 with 85 per cent of these becoming tariff-free within a decade. Whisky and gin tariffs will be halved to 75 per cent before dropping to 40 per cent by year ten of the deal.<\/p>\n
Automotive tariffs will fall from more than 100 per cent to 10 per cent under a new quota system, and taxes will also be cut on exports of medical devices, aircraft parts and machinery.<\/p>\n
![\"A](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/05\/\/d519c7bc-83f4-4823-9f81-19acc9f00d76.jpg\")
<\/p>\n
Textiles from India will enjoy reduced tariffs<\/p>\n
SANJAY KANOJIA\/NURPHOTO\/GETTY IMAGES<\/p>\n
This will reduce tariff costs to UK business by \u00a3400 million when the deal comes into force, a figure that will more than double to about \u00a3900 million after ten years.<\/p>\n
In return the UK has cut tariffs on Indian imports including clothes, shoes and some food products, which ministers said would give consumers \u201ccheaper prices and more choice\u201d.<\/p>\n
Government sources said the deal would also give UK service firms greater access to Indian markets, including some government procurement. It will liberalise customs procedures and rules of origin, allowing goods assembled in the UK to benefit from lower rates of tax. <\/p>\n
What\u2019s in it for the UKIndia will remove or reduce tariffs on 92 per cent of UK goods exports.Gin and whisky exports will see tariffs fall from 150 per cent to 40 per cent. Luxury car tariffs will fall from 100 per cent to ten per cent.UK food and drink, such as chocolate, salmon, biscuits and lamb, will not pay any tariffs.Zero tariff will also apply to machinery, medical devices and auto parts.UK firms will also be granted access to around 40,000 Indian procurement contracts with a value of at least \u00a338 billion a year.<\/p>\n
Overall, the government estimates the deal will boost Britain\u2019s economy by 0.1 per cent by 2040. Its impact on growth could be equivalent to the recent trade deals with Australia, Japan and New Zealand combined. <\/p>\n
The agreement was signed following a call between Starmer and Narendra Modi, the Indian prime minister, and is due to come into effect within the next 12 months. <\/p>\n
Starmer described the announcement as a \u201chistoric day for the United Kingdom and for India\u201d. He added: \u201cThis is the biggest trade deal that we have done since we left the EU, and it\u2019s the most ambitious trade deal that India has ever done. This will be measured in billions of pounds into our economy and jobs across the whole of the United Kingdom.\u201d<\/p>\n
![\"A](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/05\/\/113f75fc-d9d0-4adc-bb36-8897ca223d0f.jpg\")
<\/p>\n
The UK is to slash tariffs on Indian textile imports<\/p>\n
ERIC LAFFORGUE\/ART IN ALL OF US\/CORBIS\/GETTY IMAGES<\/p>\n
Modi said the \u201clandmark agreement\u201d would \u201cfurther deepen our comprehensive strategic partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies\u201d.<\/p>\n
The move was broadly welcomed by business. The Confederation of British Industry said ministers should be commended for delivering a trade deal that \u201csafeguards our national interests, protects high standards, and delivers market access for UK firms\u201d. <\/p>\n
What\u2019s in it for IndiaAlmost 100 per cent of Indian exports to the UK will pay zero tariffs.Textiles, footwear, toys, and jewellery will all be exempt from tariffs which are as high as 6 per cent.The UK is also removing some so-called non-tariff barriers to Indian exports that make it harder for Indian firms to sell goods in the UK.Indian workers will no longer have to pay national insurance contributions for up to three years while in the UK.<\/p>\n
![\"Narendra](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/05\/\/1b9f19a2-a0fe-4743-9995-ac6fb2278c80.jpg\")
<\/p>\n