UK strikes major post-Brexit trade deal with India

The UK government has secured its largest post-Brexit trade agreement to date with India, a deal hailed by Prime Minister Keir Starmer’s administration as a significant boost to the British economy. The agreement, finalized after months of negotiations, is expected to enhance trade in sectors such as whisky, gin, cars, and cosmetics, potentially lowering prices for UK consumers. However, the deal has sparked fierce backlash from opposition parties over a controversial provision granting Indian temporary workers and their employers a three-year exemption from National Insurance contributions.

The agreement, finalized after months of negotiations, is expected to enhance trade in sectors such as whisky, gin, cars, and cosmetics

The trade pact, described as “historic” by government officials, aims to strengthen economic ties with one of the world’s fastest-growing economies. It is projected to increase bilateral trade, which was valued at £38 billion in 2024, by reducing tariffs and easing market access for British goods. “This deal will drive economic growth, create jobs, and deliver cheaper goods for shoppers,” a Downing Street spokesperson said, emphasizing the potential for billions in economic gains as India’s middle class expands in the coming decades.

However, the inclusion of a tax break for Indian workers has drawn sharp criticism from both Reform UK and the Conservative Party. The provision exempts certain Indian temporary workers and their employers from paying National Insurance contributions for three years, a move critics argue incentivizes hiring foreign staff over British workers. Reform UK leader Nigel Farage called the deal “a betrayal of British workers,” accusing Labour of prioritizing foreign interests. Tory MP Andrew Griffith echoed these sentiments, warning of “a surge in immigration” and claiming the exemption amounts to a “discount for Indian companies” at the expense of UK taxpayers.

The controversy comes at a sensitive time for Labour, which is still reeling from a bruising set of local election results last week. Reform UK’s unprecedented gains, including control of 10 local councils and two mayoral races, have intensified political pressure on Starmer’s government. A recent poll by GB News showed Reform UK leading the Conservatives by 12 points, underscoring the populist party’s growing influence.

Defending the deal, Trade Secretary Jonathan Reynolds argued that the tax exemption is a limited measure within a broader agreement that “brings billions into the UK economy.” He noted that Indian workers covered by the deal would still pay the NHS health surcharge and that the provision was a necessary compromise to secure access to India’s lucrative market. “This is about creating opportunities for British businesses and workers while building a partnership with a global economic powerhouse,” Reynolds told BBC News.

Economic analysts have mixed views on the deal’s impact. The Bank of England, poised to cut interest rates to 4.25% amid fears of a “growth shock” from US tariffs, has warned of inflationary pressures from rising energy and food prices. The International Monetary Fund recently downgraded the UK’s 2025 growth forecast to 1.1%, citing global trade uncertainties. While the India deal could provide a much-needed economic lift, some economists caution that its benefits may be offset by domestic challenges, including a reported 4.7% rise in tenants missing rent payments due to ongoing cost-of-living pressures.