Reduced tariffs on whisky and gin as UK and India strike £26bn trade deal

The UK and India have struck a trade deal that will slash tariffs on products such as whisky and gin. 

The agreement will also see Indian tariffs cut on cosmetics and medical devices and will deliver a £4.8bn boost to the UK economy, according to the government.

It is also expected to increase bilateral trade by £25.5bn, UK GDP by £4.8bn and wages by £2bn each year in the long term.

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The news will be a welcome boost for Labour following poor local election results, which saw the party lose the Runcorn by-election and control of Doncaster Council to a resurgent Reform UK.

What will also be touted as a victory for Downing Street is the fact the government managed to strike a deal with India before the White House.

Sir Keir Starmer hailed the agreement as a sign the UK was “in a new era for trade and the economy”.

“That means going further and faster to strengthen the UK’s economy, putting more money in working people’s pockets,” he added.

“Through this government’s stable and pragmatic leadership, the UK has become an attractive place to do business. Today we have agreed a landmark deal with India – one of the fastest growing economies in the world, which will grow the economy and deliver for British people and business.”

In a post on X on Tuesday, Indian Prime Minister Narendra Modi hailed the agreement as a “historic milestone” and added: “I look forward to welcoming PM Starmer to India soon.”

Negotiations for the deal – the biggest bilateral trade deal the UK has done since leaving the EU – relaunched in March after stalling under the Tory government over issues including trade standards and the relaxation of visa rules for Indian workers.

Overall, 90% of tariff lines will be reduced under the deal, with 85% of those becoming fully tariff-free within a decade.

Whisky and gin tariffs will be halved from 150% to 75% before falling to 40% by year ten of the deal, while automotive tariffs will go from more than 100% to 10% under a quota, the Department for Business and Trade (DBT) said.

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For Indian consumers, there will be reduced tariffs on cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits.

Meanwhile, British shoppers could see cheaper prices and more choice on products including clothes, footwear, and food products including frozen prawns as the UK liberalises tariffs.

Business and Trade Secretary Jonathan Reynolds said: “By striking a new trade deal with the fastest-growing economy in the world, we are delivering billions for the UK economy and wages every year and unlocking growth in every corner of the country, from advanced manufacturing in the North East to whisky distilleries in Scotland.

“In times of global uncertainty, a pragmatic approach to global trade that provides businesses and consumers with stability is more important than ever.”