RIO DE JANEIRO, Brazil — The United Kingdom and India have reached a significant trade agreement that aims to boost bilateral ties through reduced tariffs on key exports. The pact, finalized during the G20 summit, marks a pivotal moment for the U.K. as Prime Minister Keir Starmer engages in his first international trade negotiations since taking office.

Under the newly established agreement, India will progressively lower tariffs on various imports from Britain. According to U.K. officials, the majority of goods traded between the two nations are set to become entirely tariff-free within a decade. Notably, tariffs on U.K. exports such as whisky and gin will be reduced from 150% to 75% and eventually to 40%. The agreement also includes substantial cuts in automotive tariffs, decreasing from over 100% to 10%.

This deal arises in the backdrop of heightened global trade tensions, particularly stemming from actions taken by the United States. The trade landscape has shifted significantly as ongoing tariff hikes have strained relationships between the U.S. and its global partners.

British officials estimate that the trade agreement could increase bilateral commerce by £25.5 billion (approximately $34 billion). Last year, trade between the U.K. and India reached £42.6 billion, reflecting an 8.3% increase from 2023. However, the U.K. reported an £8.4 billion trade deficit with India at the close of 2024, emphasizing the need for strategic partnerships.

In a statement, Prime Minister Starmer hailed the agreement as a “landmark deal” with one of the world’s fastest-growing economies. He underscored the importance of fostering alliances to create a robust and secure economy at home. Starmer’s administration views this agreement as a crucial step in executing its broader economic strategy.

Indian Prime Minister Narendra Modi also expressed optimism about the deal, stating it will further “deepen” the longstanding relationship between the two countries. In a post on social media, he referred to the agreement as a historic milestone that would enhance trade, investment, and innovation.

Business leaders have welcomed the deal, highlighting its potential to improve economic resilience amidst rising global trade tensions. Keshav R. Murugesh, CEO of WNS, noted that the free trade agreement (FTA) would provide access to new markets and help mitigate vulnerabilities to external shocks. Murugesh, who also chairs the Confederation of Indian Industry UK Business Forum, emphasized the relevance of this agreement in a volatile international climate.

As the U.K. navigates its post-Brexit trade landscape, collaborations with nations like India demonstrate a commitment to global economic engagement. This agreement not only signifies the strengthening of bilateral trade but also reflects a broader strategy to position the U.K. as a competitive player on the international stage.