Global Daily Tax News, UK, India Agree To Slash Tariffs On Two-Way Trade, (Jul 28, 2025)

On July 23, 2025, the UK and India signed a new comprehensive free trade deal.

Welcoming the deal, the UK Government said the agreement provides for a reduction in the average tariff on UK goods to the Indian market from 15 percent to three percent, in a development expected to boost UK exports of drinks, cosmetics, cars, and medical devices in particular.

Specifically, for goods exported by the UK's aerospace sector, tariffs as high as 11 percent will be reduced to zero percent, while those on vehicles will be lowered from as high as 110 perccent to 10 percent within a quota. Tariff rates on electrical machinery will fall from 22 percent to either zero percent or 11 percent.

Meanwhile, tariffs on UK-made whisky will be cut by half, from 150 percent to 75 percent. These tariffs will be further reduced over the following ten years after entry into force of the agreement, until the tariff rate reaches 40 percent.

The Government added: "The UK already imports GBP11bn in goods from India, but liberalised tariffs on Indian goods will make it easier and cheaper to buy their best products. For businesses, this could mean potential savings when importing components and materials used in areas such as advanced manufacturing or luxury and consumer goods."

Meanwhile, the Indian Government said the deal will result in the removal of UK tariffs on 99 percent of Indian goods. It said: "This is expected to open new opportunities for labour-intensive industries such as textiles, marine products, leather, footwear, sports goods, toys, and gems and jewellery, alongside fast-growing sectors like engineering goods, auto components, and organic chemicals."

In addition, the Indian Government announced that the two nations had agreed a social security agreement, stating: "This will exempt Indian professionals and their employers from social security payments in the UK for up to three years, improving the cost competitiveness of Indian talent."