Reduced tariffs on whisky and gin as UK and India strike historic trade deal

The UK and India have struck an “ambitious” 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.

The news will be a welcome boost for the government following poor local election results, which saw Labour 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.

Speaking to reporters on Tuesday, Sir Keir Starmer hailed the “historic day for the United Kingdom and for India”.

“This is the biggest trade deal that we, the UK, have done since we left the EU,” the prime minister said.

“And it’s the most ambitious trade deal that India has ever done. And this will be measured in billions of pounds into our economy and jobs across the whole of the United Kingdom.

“So it is a really important, significant day. ”

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

Negotiations for the deal 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.

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.

Asked whether the deal brought in any immigration changes for India, Business and Trade Secretary Jonathan Reynolds replied: “It doesn’t include any changes to our immigration system or lock in any use of the visa system – that is is done separately to our trade agreements.

“It opens up a small number of visas for an existing route for chefs and musicians and yoga teachers – very, very small – about 1,800,” he added.

Shadow trade secretary Andrew Griffith added: “It’s good to see the government recognise that reducing cost and burdens on businesses in international trade is a good thing, and that thanks to Brexit we can do.

“But it would be even better if they would apply the same reasoning to our domestic economy, where they remain intent on raising taxes, energy costs and regulatory burdens.”

The news was also welcomed by business group the British Chamber of Commerce, which said it was a “welcome lift for our exporters”.

William Bain, head of trade policy, said:  ”Against the backdrop of mounting trade uncertainty across the globe, these tariff reductions will be a big relief. Products from Scotch whisky to clothing will benefit and this will give UK companies exporting to India a clear edge on increasing sales.

“The proposals for a follow-up investment treaty will also provide a solid platform to grow manufacturing and other sectors in our two economies.”