In the UK Parliament, Prime Minister Keir Starmer has lauded the newly secured Free Trade Agreement (FTA) with India, calling it "historic" and "fantastic". Starmer strongly criticized the opposition Conservative Party for their inclination to "rip it up". This endorsement came during a session of Prime Minister's Questions (PMQs) in the House of Commons.
Starmer highlighted his Labour government's success in finalizing the FTA negotiations with India, a feat that eluded the Conservatives during their eight years in power. He emphasized the deal's potential to boost the economy, create jobs, slash tariffs, and drive economic growth. He pointed out specific benefits, such as the reduction of tariffs on cars to 10 percent and the halving of tariffs on whisky and gin, estimating that the deal would bring £4.8 billion into the UK economy.
The FTA, agreed upon on May 6, 2025, after three years of negotiations, is projected to add an extra £25.5 billion annually to the current two-way trade of £41 billion. Both the UK and Indian governments have hailed the agreement as a significant milestone that will strengthen economic ties and create new opportunities.
Under the terms of the agreement, tariffs on various UK exports to India will be reduced, including gin and whisky, aerospace, electricals and medical devices, cosmetics, lamb, salmon, chocolates and biscuits, and higher-value cars. Tariffs on gin and whisky will be halved to 75%, with further reductions planned in later years. Tariffs on expensive UK-made cars exported to India will fall from 100% to 10%, subject to a quota. In return, 99% of Indian tariff lines, covering nearly 100% of trade value, will now enjoy zero duty, opening huge export opportunities for India in sectors such as textiles, marine products, leather, footwear, sports goods, toys, gems & jewellery, engineering goods, auto parts, engines, and organic chemicals.
The agreement also addresses the movement of workers between the two countries. Some Indian and British workers will benefit from a three-year exemption from social security payments, which the Indian government called "an unprecedented achievement". This is formalized through a "Double Contribution Convention" that prevents temporary workers from paying social security contributions in both countries.
The UK government views this FTA as its "biggest and most economically significant" bilateral trade agreement since leaving the European Union in 2020. India, currently the fifth-largest economy in the world, is forecast to become the third-largest within a few years, making it a desirable trading partner for the UK. The FTA is expected to substantially improve the competitiveness of Indian goods in the UK compared to other countries.
However, the FTA has faced some criticism. Opposition parties have suggested that the India trade deal could undercut UK business. Robert Jenrick, the shadow justice secretary, said it would leave British workers coming last, as Indian workers here for less than three years will not pay National Insurance in the UK. Despite these concerns, the government remains optimistic about the long-term benefits of the agreement.
