First UK-India Free Trade Agreement Amid Trump's Trade War

India to reduce tariffs on UK alcohol and cars from 150%, 100% to 40%, 10% within 10 years

"Agreement expected to increase bilateral trade by 47 trillion won"

Amid the trade war initiated by the United States, the UK and India signed their first bilateral trade agreement on the 6th (local time). The two countries agreed to reduce tariffs on major exports such as British whiskey and cars.

According to CNBC, the deal will see India gradually lower tariffs on imports from the UK and exempt most goods traded between the two countries from tariffs within 10 years.

Tariffs on British exports such as whiskey and gin will be halved from the current 150% to 75% under the agreement, and further reduced to 40% within 10 years. Additionally, car tariffs will be significantly reduced from over 100% to 10%.

The UK government expects this agreement to increase bilateral trade by 25.5 billion pounds (47.33 trillion won). As of the end of last year, the trade volume between the two countries increased by 8.3% year-on-year to 42.6 billion pounds (79 trillion won).

By the end of 2024, the UK recorded a trade deficit of 8.4 billion pounds in goods and services with India. India is the UK's 11th largest trading partner.

UK Prime Minister Keir Starmer said, "Strengthening alliances with global economic powers and lowering trade barriers is part of our plan to make the domestic economy stronger and more secure."

Indian Prime Minister Narendra Modi said on X, "As a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement (FTA) and Double Taxation Agreement (DCC)."

Guest reporter Jung-A Kim kja@hankyung.com