A sweeping new trade agreement between the UK and India promises tariff reductions, billions in investment, and deeper bilateral ties, but it’s already drawing scrutiny over service sector access, labor protections, and climate safeguards.
Tariff Cuts Anchor New Trade Pact
Signed at Chequers after more than three years of negotiations, the UK-India Free Trade Agreement marks the largest post-Brexit deal yet for Britain. It is projected to boost the UK economy by £4.8 billion annually and attract £6 billion in combined bilateral investment. Average tariffs on UK goods entering India will fall from 15% to 3%, with luxury items such as whisky seeing duties halved immediately, falling further to 40% by 2035. UK exports including medical devices, aerospace components, cosmetics, and premium foods like lamb and salmon are also set to benefit.
For India, the agreement opens up wider UK access for goods like textiles, gems, footwear, and electric vehicles, which are key to its manufacturing growth ambitions. Indian Prime Minister Narendra Modi called the deal “a blueprint for shared prosperity,” while UK Prime Minister Keir Starmer positioned it as a symbol of Britain’s global commercial resurgence. The deal also includes provisions on worker secondments, allowing temporary staff from either country to avoid double social security contributions, a sticking point critics say may allow labor cost arbitrage, though UK officials insist reciprocal terms are already common across existing agreements.
The full implementation timeline stretches ahead: while India’s cabinet has approved the deal, it awaits ratification by both countries’ parliaments.
Access Gaps and Climate Rows Cloud Outlook
Despite the economic upside, the agreement falls short of expectations in critical service sectors. UK negotiators were unable to secure significant concessions in India’s legal or financial services industries, where regulatory protections remain tight. Talks on a separate bilateral investment treaty, which would enhance legal protections for British firms operating in India, are ongoing but face political headwinds.
Climate and labor advocates have also raised alarms. Groups such as the Trade Justice Movement and London Mining Network argue that the deal lacks enforceable provisions on labor rights, environmental protection, and public health, particularly concerning coal-intensive sectors in India. Disputes are also simmering over the UK’s proposed carbon border adjustment mechanism, which Indian officials claim unfairly penalizes their exports.
Opposition voices question the deal’s trade-offs. While the government touts job creation from Indian firms expanding into the UK, others warn of potential displacement or weakening of labor standards. Business Secretary Jonathan Reynolds rejected claims that Indian workers would undercut domestic labor, pointing to visa fees and NHS surcharges that negate any cost advantage.
Human rights concerns also surfaced during Modi’s visit. Starmer raised the prolonged detention of Scottish Sikh activist Jagtar Singh Johal, jailed in India since 2017 without conviction on terror charges. His case remains a flashpoint in UK-India diplomacy, with calls for stronger action from the UK government.
The Real Leverage Is Political, Not Just Economic
While much of the spotlight is on tariffs and trade flows, the deeper strategic significance of this deal may lie in its diplomatic positioning. As global supply chains fragment and geopolitical alliances shift, the UK is looking beyond its traditional trade partners to recalibrate influence.
The India deal, though incomplete in some areas, signals London’s willingness to adapt its commercial diplomacy toward emerging power centers. For India, this is not just a market access agreement, it’s a platform for long-term economic statecraft. As both countries navigate new industrial policies and climate responsibilities, this agreement may become more valuable for the doors it opens than the products it moves.