Britain and India agreed to a trade deal on Tuesday, strengthening economic ties between two of the world’s largest economies amid President Trump’s upheaval of the global trade system.
The deal, which the British government said would increase bilateral trade by £25.5 billion ($34 billion), comes three years after the negotiations began. Intense talks between Jonathan Reynolds, Britain’s business and trade secretary, and Piyush Goyal, India’s commerce minister, took place last week to finalize the outstanding issues.
The British government said India had reduced 90 percent of tariffs on goods, and within a decade most of those would become tariff free. Duties on British whiskey and gin would be halved, to 75 percent, and eventually be lowered to 40 percent. India will also reduce its car tariffs, which exceed 100 percent, to 10 percent under a quota. Britain, in turn, reduced tariffs on clothes, footwear and food products including frozen prawns.
Last year, trade in goods and services between India and Britain, the world’s fifth and sixth largest economies, totaled £42.6 billion, according to British data.
The trade agreement comes as many countries are seeking to bolster alliances and trade flows after Mr. Trump sent shock waves through the global economy by announcing, and then pausing, high tariffs on dozens of countries. The uncertainty created by the policy whiplash is expected to dampen investment and economic growth around the world.
Officials in Britain, which squeezed out 0.1 percent economic growth in the final quarter of last year, have tried to increase investment from foreign companies and sign more trade deals. Other negotiations, including those with South Korea, are continuing.
“We are now in a new era for trade and the economy,” Keir Starmer, the British prime minister, said on Tuesday. “That means going further and faster to strengthen the U.K.’s economy,” he said, adding that meant forming closer alliances and reducing trade barriers with other countries.
Since 2020, when Britain formally left the European Union, its largest trading partner, the nation has tried to strike new trade deals farther afield. A trade deal with India had proved elusive, despite being promised by former British prime ministers including Boris Johnson who, in 2022, said he was aiming to achieve such an agreement by Diwali in late October that year. But the negotiations had gotten stuck on several key issues, including India’s request for more visas for its citizens in Britain. The stalled negotiations were restarted by the new Labour government in February.
Mark Kent, chief executive of the Scotch Whisky Association, said the reduction in tariffs was “transformational” in giving producers of Scotland-made whiskey access to the world’s largest whiskey market. It has the potential to increase exports by £1 billion over the next five years.
The announcement provides a little good news for Mr. Starmer after a big setback for his governing Labour Party in regional and mayoral elections last week.
Beyond India, there is a potentially greater economic prize for Britain from new trade agreements with the European Union and the United States.
Progress on an E.U. deal is expected later this month at a summit in Britain. However, the extent to which a deal will ease the trade friction introduced by Brexit is unclear.
The European Union is Britain’s biggest and geographically closest trade partner, and the United States is the most important individual nation for trade flows. So far, Britain has not achieved exemptions from U.S. tariffs on imports — including on British cars — and President Trump’s latest threat to target movies made outside the United States has caused alarm in the British film industry.
