A landmark free trade agreement between the United Kingdom and India, concluded on May 6, 2025, promises a significant boost to the British whisky industry by slashing India's prohibitive import tariffs. Under the deal, India will cut its 150% tariff on British whisky and gin to 75% immediately, with a further reduction to 40% over the next ten years.
The agreement, described by Prime Minister Keir Starmer as "a new era for trade and the economy," marks the most comprehensive bilateral trade deal signed by the UK since Brexit. Indian Prime Minister Narendra Modi hailed it as a “historic milestone” that would catalyze trade, innovation, and job creation in both economies.
India, home to the largest whisky market globally, currently represents a challenging landscape for imported whisky brands due to steep tariffs. The reduction in duties is expected to unlock new opportunities, particularly for smaller UK producers. According to Mark Kent, Chief Executive of the Scotch Whisky Association, the deal is “transformational” and could drive Scotch whisky exports to India up by GBP 1 billion (USD 1.25 billion) over the next five years while creating approximately 1,200 new jobs across the UK.
The agreement aims to enhance bilateral trade by GBP 25.5 billion (USD 32 billion) by 2040 and boost the UK’s GDP by GBP 4.8 billion (USD 6 billion) annually. It includes provisions to liberalize 90% of Indian tariff lines on UK exports, encompassing not only whisky but also cosmetics, aerospace components, medical devices, and lamb. Conversely, 99% of Indian exports to the UK will enjoy zero tariffs, especially benefiting India’s textile, leather, seafood, and toy industries.
The whisky industry is among the clearest winners. For decades, the Indian market has been dominated by domestically produced brands due to high duties on foreign products. The new deal enables more competitive pricing and a wider selection for Indian consumers. As Business and Trade Secretary Jonathan Reynolds stated, the agreement provides UK businesses with a competitive edge in one of the world’s most dynamic markets, which is expected to become the third-largest global economy within three years.
Apart from tariff reductions, the agreement includes measures to simplify customs procedures and improve digital trade frameworks. This is expected to benefit small and medium-sized enterprises looking to export to India. Enhanced copyright protections and streamlined regulations further solidify the UK’s positioning in the Indian market.
Negotiations for the deal began in 2022 but saw several delays due to political transitions in both countries. Talks resumed early in 2025 and culminated in a final agreement signed in London following intensive discussions led by Jonathan Reynolds and Indian Commerce Minister Piyush Goyal.
The trade pact must now be ratified by both governments. Once in effect, it is poised to transform not only the UK-India economic relationship but also the dynamics of international whisky trade, setting a new precedent for bilateral cooperation.
