Policy Alert: India-UK Trade Agreement

Action: The UK and India recently reached a framework trade agreement, the UK’s largest since leaving the European Union, covering many goods but not services.

Key Insights

The UK-India deal is the result of three years of negotiation. It contains fewer provisions on labor than India wanted but cuts tariffs significantly in both directions, with sharp reductions in tariffs on British cars and alcohol. India also agreed to cut tariffs on about 90% of bilateral trade, including in food, medical devices, aircraft parts, and other goods. The UK will cut tariffs on clothes, footwear, and food.
Services were mostly excluded from the agreement, pending a discussion on a broader bilateral investment treaty which could cover financial and professional services as well. The UK will continue to enforce its carbon tax on imports.
The UK Government estimates the agreement will provide £4.8 billion per year in benefits to the UK economy by 2040.
India and the US are also trying to negotiate a comprehensive bilateral trade agreement, which could perhaps be a model for other agreements. India decided not to join the Regional Comprehensive Economic Partnership in 2023, and is not a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership; both agreements include many countries in the Asia-Pacific region. India does seek, however, a trade agreement with the European Union, but this will require hard compromises from India, particularly in agriculture, which is sensitive in both jurisdictions. A deadline for agreement by the end of the year may be difficult to achieve.

Policy Alert: India-UK Trade Agreement

May 08, 2025

Action: The UK and India recently reached a framework trade agreement, the UK’s largest since leaving the European Union, covering many goods but not services.

Key Insights

The UK-India deal is the result of three years of negotiation. It contains fewer provisions on labor than India wanted but cuts tariffs significantly in both directions, with sharp reductions in tariffs on British cars and alcohol. India also agreed to cut tariffs on about 90% of bilateral trade, including in food, medical devices, aircraft parts, and other goods. The UK will cut tariffs on clothes, footwear, and food.

Services were mostly excluded from the agreement, pending a discussion on a broader bilateral investment treaty which could cover financial and professional services as well. The UK will continue to enforce its carbon tax on imports.

The UK Government estimates the agreement will provide £4.8 billion per year in benefits to the UK economy by 2040.

India and the US are also trying to negotiate a comprehensive bilateral trade agreement, which could perhaps be a model for other agreements. India decided not to join the Regional Comprehensive Economic Partnership in 2023, and is not a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership; both agreements include many countries in the Asia-Pacific region. India does seek, however, a trade agreement with the European Union, but this will require hard compromises from India, particularly in agriculture, which is sensitive in both jurisdictions. A deadline for agreement by the end of the year may be difficult to achieve.

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