UK and India clear final hurdle as trade deal set for July launch

The free trade agreement between Britain and India will come into force next month after India said its concerns over the UK’s forthcoming steel tariff regime had been addressed, removing a key obstacle that had threatened to delay implementation of the pact.

Britain and India agreed the long-awaited trade deal last year, linking the world’s fifth- and sixth-largest economies in one of the most ambitious agreements of its kind amid global trade uncertainty triggered by US President Donald Trump’s tariff policies.

According to UK government figures, the agreement is forecast to boost British GDP by £4.8 billion ($6.5 billion) and increase bilateral trade by £25.5 billion in the long run.

Under the deal, India will reduce whisky tariffs to 40 per cent from 150 per cent by the agreement’s 10th year. Tariffs on automotives will fall to 10 per cent under a quota system from 100 per cent, while Britain will lower tariffs on products including clothes, footwear and some food items.

Countries move ahead after leaders meet

The two countries agreed on Wednesday to proceed with implementation of the trade deal on July 15 following talks between British prime minister Keir Starmer and his Indian counterpart Narendra Modi during the G7 leaders’ summit in France.

“A historic milestone for India-UK relations,” Modi said on X, adding the agreement would “significantly boost our bilateral trade and investment.”

Indian officials had previously suggested reopening or delaying implementation of the free trade agreement because of concerns about the impact of Britain’s new steel trade measures, which are due to take effect on July 1.

As part of efforts to protect its domestic steel industry from rising global supply, Britain will sharply reduce tariff-free steel quotas and impose steep duties on shipments exceeding those limits from next month. Details of the measures are still being finalised.

The Indian government said on Wednesday that 85 per cent of Indian exports would not be affected by Britain’s steel measures. It added that products covered by the restrictions would continue to have access through quotas and other mechanisms.

“Following constructive deliberations… both sides mutually agreed to protect commercial interests, minimize market disruptions, and ensure an overall balanced and stable trading environment for exporters,” the Indian government said.

A British official had previously stated that discussions on implementing the free trade agreement were separate from the steel trade measures. Wednesday’s announcement from the British government made no reference to any separate arrangement on steel.

The agreement will come into effect almost exactly one year after it was signed, which Britain said was the quickest turnaround following signature of any trade deal. Indian officials had earlier suggested that the steel dispute prevented implementation in May, although Britain had never set a timeline for the talks.

“The deal gives British exporters an edge over international competitors,” British Business and Trade Secretary Peter Kyle said in a statement.

Britain and India have also agreed that workers on temporary postings will no longer have to make social security contributions in both countries. On Wednesday, the two sides announced that the period during which workers can be exempted from so-called “double contributions” would be extended to five years from three.