Signed in July 2025, the agreement aims to cut tariffs on key goods, including textiles, whiskey, and automobiles. It also offers greater market access for businesses in both countries and is expected to increase trade by £25.5 billion (approximately 3,025 billion) by 2040. Within just three months of signing, trade and investment between India and the UK have already risen by £6 billion (approximately 711 billion), reflecting an early surge in confidence among industries.

Impact on the automotive sector

The reduction of tariffs on cars is expected to be a game-changer for the automotive industry in both nations. For Indian automakers, the deal provides easier access to the UK market, opening doors for brands like Tata Motors, Mahindra, and Maruti Suzuki to expand exports of electric and small cars. It supports India’s goal of becoming a global EV manufacturing hub, aligning with the “Make in India” and green mobility initiatives.

For British carmakers, lower import duties will make luxury brands such as Jaguar Land Rover, Aston Martin, and Bentley more competitive in India. With tariffs on high-end vehicles reduced, Indian consumers could see more affordable luxury car pricing in the coming years. This could also encourage joint research and development in cleaner mobility solutions, as both countries emphasize sustainability and innovation in transportation.

New investment commitments

Britain confirmed that 64 Indian companies will collectively invest £1.3 billion ( 153.4 billion) in the UK across sectors, including automotive manufacturing, clean energy, and tech startups. Starmer, addressing business leaders at the India-UK CEO Forum, said, “This is just the start. It’s time to invest in the United Kingdom, invest in this relationship, and invest in our shared future.”

Political context and outlook

Despite occasional differences on geopolitical issues, such as the Russia–Ukraine conflict, both governments stressed that their economic partnership remains strong. PM Modi emphasized the “unique synergy” between India’s growth dynamism and the UK’s expertise, while Starmer reaffirmed his commitment to making the trade pact operational within a year. For India, the deal not only bolsters trade but also strengthens its push for industrial modernisation, self-reliance, and global competitiveness in key sectors like automotive, defence, and clean energy.

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First Published Date: 09 Oct 2025, 20:00 pm IST