Reduced tariffs on whisky and gin as UK and India strike ‘historic’ trade deal
The UK and India have struck an “ambitious” trade deal that will slash tariffs on products such as whisky and gin.
The agreement will also see Indian tariffs cut on cosmetics and medical devices and will deliver a £4.8bn boost to the UK economy, according to the government.
It is also expected to increase bilateral trade by £25.5bn, UK GDP by £4.8bn and wages by £2.2bn each year in the long term.
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The news will be a welcome boost for the government following poor local election results, which saw Labour lose the Runcorn by-election and control of Doncaster Council to a resurgent Reform UK.
What will also be touted as a victory for Downing Street is the fact the government managed to strike a deal with India before the White House.
Speaking to reporters on Tuesday, Sir Keir Starmer hailed the “historic day for the United Kingdom and for India”.
“This is the biggest trade deal that we, the UK, have done since we left the EU,” the prime minister said.
What trade-offs are in the ‘historic’ deal with India?
This is the most significant trade deal Britain has negotiated since Brexit. It has been three years in the making with round the clock negotiations taking place in recent days.
Britain and India were coming from very different starting points. India’s economy is notoriously protectionist, with average tariff rates floating at around 130%. The UK, by comparison, is a very open economy. Our tariff rates hover around 5%. It means there were many prizes on offer for UK exporters, who are eyeing up a rapidly growing economy with increasingly powerful consumers.
The government will point to considerable concessions on 90% of tariff lines, 85% of them will go down to zero within the decade. It includes wins on whisky, which within ten years will be halved from the current 150%. No other country has managed to get India to move on that.
Of course there are trade-offs involved. The UK has agreed to lower tariffs on Indian textiles and apparel- a big employer in India. It will also make it easier for Indian professionals to come to the UK, something the Indians have been pushing hard on. However, there will be no formal changes to immigration policy.
Both countries have also refused to budge on certain industries. The UK has not lowered tariffs on milled rice, out of fear it could decimate native industries. The same applies to dairy for the Indians. Both sides have agreed quotas on cars for the same reason.
The Indians were pushing for an exemption for its high emission industries from the UK’s upcoming carbon tax. It is understood that will not happen.
“And it’s the most ambitious trade deal that India has ever done. And this will be measured in billions of pounds into our economy and jobs across the whole of the United Kingdom.
“So it is a really important, significant day. “
In a post on X, Indian Prime Minister Narendra Modi also welcomed the agreement as a “historic milestone” and added: “I look forward to welcoming PM Starmer to India soon.”
Negotiations for the deal relaunched in March after stalling under the Tory government over issues including trade standards and the relaxation of visa rules for Indian workers.
Overall, 90% of tariff lines will be reduced under the deal, with 85% of those becoming fully tariff-free within a decade.
Whisky and gin tariffs will be halved from 150% to 75% before falling to 40% by year ten of the deal, while automotive tariffs will go from more than 100% to 10% under a quota, the Department for Business and Trade (DBT) said.
For Indian consumers, there will be reduced tariffs on cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits.
Meanwhile, British shoppers could see cheaper prices and more choice on products including clothes, footwear, and food products including frozen prawns as the UK liberalises tariffs.
India’s trade ministry said that under the deal, 99% of Indian exports will benefit from zero duty, Britain will remove a tariff on textile imports and Indian employees working in the UK will be exempt from social security payments for three years.
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Shadow trade secretary Andrew Griffith added: “It’s good to see the government recognise that reducing cost and burdens on businesses in international trade is a good thing, and that thanks to Brexit we can do.
“But it would be even better if they would apply the same reasoning to our domestic economy, where they remain intent on raising taxes, energy costs and regulatory burdens.”
The news was also welcomed by business group the British Chamber of Commerce, which said it was a “welcome lift for our exporters”.
William Bain, head of trade policy, said: ”Against the backdrop of mounting trade uncertainty across the globe, these tariff reductions will be a big relief. Products from Scotch whisky to clothing will benefit and this will give UK companies exporting to India a clear edge on increasing sales.
“The proposals for a follow-up investment treaty will also provide a solid platform to grow manufacturing and other sectors in our two economies.”
Israel has said 24 hostages are alive in Gaza – after Donald Trump said there were 21.
The US president told reporters on Tuesday that three more hostages held by Hamas in Gaza had died – alarming their families.
In a post on X on Wednesday, Gal Hirsch, Israel’s coordinator for hostage issues, said the Palestinian militant group was holding 59 hostages of whom 24 were alive and 35 dead – figures unchanged since before Mr Trump‘s comments.
He said 54 of the 59 were Israeli citizens and five of them were foreign nationals.
“All families of the kidnapped are always updated with the information we have about their loved ones,” he said.
The group representing the families of hostages had asked the Israeli government to share any new information with them immediately following Mr Trump’s comments.
It argues that Israel should stop the fighting and negotiate the release of the remaining hostages.
“This is the most urgent and important national mission,” it said on a post on X.
Most of the hostages returned alive to Israel so far have been released as part of deals with Hamas during two temporary ceasefires in late 2023 and early 2025.
The most recent ceasefire that saw a pause in the fighting and the exchange of Israeli hostages and Palestinian prisoners fell apart in March.
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Hamas took 251 hostages in its attacks on Israel on 7 October 2023 in which it killed 1,200 people.
Israel has responded with an air and ground assault on Gaza.
The Hamas-run Gaza health ministry says more than 52,000 Palestinians have been killed in Israeli attacks since the start of the war. Its figures do not differentiate between civilians and fighters.
Israel says its two war aims are to destroy Hamas and release the hostages.
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Israel announces plans for Gaza
On Monday, Israeli Prime Minister Benjamin Netanyahu announced an expansion of its offensive on Gaza – increasing its hold on the territory, for an indefinite amount of time.
The plan includes seizing Gaza, holding on to captured territories, forcibly displacing Palestinians to southern Gaza and taking control of aid distribution along with private security companies.
Pakistan says it has been targeted in a missile attack by India.
Three missiles were fired by India across the border into Pakistani-controlled territory, said Pakistani security officials.
They hit locations in Pakistan-administered Kashmir and in the country’s eastern Punjab province, according to officials.
The Indian defence ministry said it had launched Operation Sindoor as it struck “terrorist infrastructure” in Pakistan and Pakistan-occupied Jammu and Kashmir “from where terrorist attacks against India have been planned and directed”.
It said a total of nine sites were targeted.
A Pakistan military spokesman said the country will respond to the attacks.
Tensions between the nuclear-armed neighbours have been escalating following a militant gun attack in the disputed area of Kashmir last month.
At least 26 people, most of whom were Indian tourists, were shot dead by gunmen at a beauty spot near the resort town of Pahalgam in the Indian-controlled part of the region on 22 April.
India described the massacre as a “terror attack” and said it had “cross border” links, blaming Pakistan for backing it.
Pakistan denied any connection to the atrocity, which was claimed by a previously unknown militant group called the Kashmir Resistance.
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24 April: Pakistani minister warns ‘all-out war’ possible
Since the attack, Pakistan’s military has been on high alert after a cabinet minister said Islamabad had credible intelligence indicating that India could attack.
And Pakistan’s defence minister Khawaja Asif told Sky News’ The World With Yalda Hakim that the world should be “worried” about the prospect of a full-scale conflict involving the two nations.
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Friedrich Merz has become Germany’s new chancellor after winning a second vote in the country’s parliament.
He unexpectedly failed in the first parliamentary ballot on Tuesday morning – the first time a chancellor has failed to be elected at the first attempt since the Second World War.
Initially, needing a majority of 316 out of 630 votes in a secret ballot, he received 310 – falling short by just six votes. On the second ballot he managed 325.
It means Mr Merz, the leader of the country’s CDU/CSU conservatives, has become the 10th chancellor since the end of the Second World War.
Friedrich Merz during his swearing in ceremony. Pic: Reuters
He had been expected to win comfortably after securing a coalition deal with the centre-left Social Democrats (SPD).
It meant at least 18 coalition MPs failed to back him in the first round of voting.
Announcing the second vote, Jens Spahn, the head of the Union bloc in parliament, said: “The whole of Europe, perhaps even the whole world, is watching this second round of elections.”
Earlier, the leader of the far-right Alternative for Germany (AfD) party, Alice Weidel, said on X that Mr Merz’s failure to secure a majority in the first round showed the “weak foundation” on which his coalition was built, adding that it had been “voted out by the voters”.
Mr Merz, 69, succeeds Olaf Scholz and has vowed to prioritise European unity and the continent’s security.
Mr Merz (R) shakes hands with outgoing chancellor Olaf Scholz (L). Pic: Reuters
His in-tray includes the Ukraine war and global tariffs imposed by US President Donald Trump.
Volodymyr Zelenskyy sent congratulations to Mr Merz and wished him “every success”.
The Ukrainian president added that the future of Europe was “at stake” and security will “depend on our unity”.
Mr Merz will also have to decide what to do about the AfD, which mainstream parties have refused to work with.
A “firewall” against collaborating with strongly right-wing parties has been in place since the end of the war.
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During federal elections in late February, the AfD scored its best-ever result while Olaf Scholz’s SPD dropped to about 16%.
The AfD is the second largest party in the lower house of the Bundestag and was officially designated as extremist last week by Germany’s domestic spy agency.
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