UK and India Seal Major Trade Agreement Amid Political Firestorm

 

The United Kingdom has secured a historic trade agreement with India, marking the most significant post-Brexit economic deal to date. Under the terms of the new free trade pact, tariffs on British exports to India—including whisky and cars—will be slashed by up to 90 percent, potentially injecting £5 billion into the UK economy and driving a modest 0.1 percent increase in GDP.

 

Indian Prime Minister Narendra Modi hailed the agreement as a “historic milestone,” emphasizing its potential to deepen the UK-India strategic partnership and spur “trade, investment, growth, job creation, and innovation in both our economies.” UK Prime Minister Sir Keir Starmer echoed those sentiments, stating: “Today we have agreed a landmark deal with India – one of the fastest growing economies in the world, which will grow the economy and deliver for British people and business.”

 

However, the announcement has sparked heated political debate in Britain. A provision within the deal allowing Indian workers and their UK-based employers to be exempt from paying National Insurance for up to three years has triggered accusations of a “two-tier” tax system. Critics argue the exemption—designed to prevent workers from paying contributions in both countries—gives Indian migrants an unfair financial edge over British workers.

 

Kemi Badenoch, the Conservative leader and former business secretary, refused to endorse the deal during her tenure, stating, “This is two-tier taxes from two-tier Keir. I refused to sign this deal because: Tax refunds for Indians not available to us. Visa requests too high. Ceramics and aluminium industries would be screwed... When Labour negotiates Britain loses.”

 

Nigel Farage, leader of the Reform Party, also condemned the deal. “This Government doesn’t give a damn about working people,” he said in a video posted on X. “The Labour Party have this time in a big, big way betrayed working Britain.” He warned that Starmer’s poll ratings could suffer further, declaring, “Reform UK are the party of British workers.”

 

Robert Jenrick, the Tory shadow justice secretary, added fuel to the fire, saying: “Starmer has hiked National Insurance on Brits while giving an exemption to Indian migrants. British workers come last in Starmer’s Britain.”

 

Despite the uproar, Labour defended the deal and denied claims that it would result in a surge of Indian immigration. The government insisted the exemption is part of a standard “double contribution convention” also seen in deals with countries such as the US, South Korea, and members of the EU. British workers posted to India would similarly benefit from the exemption. Jonathan Reynolds, the Trade Secretary who led the negotiations, said critics were exaggerating the implications. “Obviously, if people were in the UK, they will still be paying income tax, they would still be paying, for instance, the health surcharge, and they wouldn’t be eligible for benefits from the National Insurance system,” he explained.

 

The deal also includes major reductions in Indian import duties on UK whisky and gin, with rates dropping from 150 percent to 75 percent and eventually down to 40 percent within a decade. Automotive tariffs will also fall dramatically, from 100 percent to 10 percent, with a quota. On the UK side, tariffs on Indian textiles, food products like prawns, and footwear will be scrapped, a move the government claims will help lower costs for British consumers.

 

While the formal signing and parliamentary scrutiny of the deal are still pending, the framework has been finalized after three years of negotiations. Indian officials described the National Insurance exemption as a “huge win” likely to lead to more job opportunities for its citizens in the UK. However, the UK Government has so far declined to publish internal estimates of how many workers will benefit from the exemption, though it emphasized that the overall migration framework remains unchanged.

 

Indian nationals are now eligible to apply for work in 33 different sectors under the Global Business Mobility Visa, up from 15, though the total number of approvals for certain roles such as chefs, musicians, and yoga instructors will be capped at 1,800 annually.

 

Meanwhile, a separate trade pact between the UK and the United States may be on the horizon, potentially shielding British car and steel exporters from harsh tariffs under a future Trump presidency. For now, the UK-India deal remains a focal point of both economic optimism and political controversy.

 

  Adpated by ASEAN Now from The Times  2025-05-08

 

 

6 hours ago, Social Media said:

. A provision within the deal allowing Indian workers and their UK-based employers to be exempt from paying National Insurance for up to three years has triggered accusations of a “two-tier” tax system. Critics argue the exemption—designed to prevent workers from paying contributions in both countries—gives Indian migrants an unfair financial edge over British workers.

Yet more baseless ‘two tier’ claims:

 

Workers from multiple other nations who are assigned to work in the UK are exempt from paying U.K. National Insurance:

 

https://www.gov.uk/guidance/new-employee-coming-to-work-from-abroad#:~:text=Employees from the EU%2C Iceland,they can apply for one.

I suspect this was not strong UK negotiating team. Very few members of the current government, or those assisting them, have any business experience.

Great news. 

 

Yet another benefit of Brexit. 😊

 

 

 

 

3 minutes ago, Thingamabob said:

I suspect this was not strong UK negotiating team. Very few members of the current government, or those assisting them, have any business experience.

 

I'd imagine most of the deal was agreed before Labour came to power. 

 

Labour have been too busy freezing pensioners, hindering employers hiring people, locking up FaceBook posters and dishing out free hotel stays and iPhones to immigrants to have wrapped this up so quickly. 

 

21 minutes ago, JonnyF said:

Great news. 

 

Yet another benefit of Brexit. 😊

 

 

"Another"? I can't recall any others.

 

The EU and India are slated to sign a trade agreement before the end of this year.

 

If that happens, we'll be able to see just how good this is.

24 minutes ago, JonnyF said:

 

I'd imagine most of the deal was agreed before Labour came to power. 

 

 

Perhaps the bulk of the deal was agreed before June last year, but the tricky bits remained and the fact remains that the Tories were incapable of finalising matters despite 4 years of trying.

 

Hansard will show that the deal was passed by parliament under a Labour government.

Hopefully another UK trade deal on the horizon:

US and UK expected to announce deal to reduce tariffs today

 

https://www.bbc.com/news/live/cn91dxzv4pnt?at_link_type=web_link&at_bbc_team=editorial&at_format=link&at_campaign=Social_Flow&at_ptr_name=twitter&at_link_origin=BBCBreaking&at_link_id=455F1DD6-2BCC-11F0-B2FD-A8CB28A5D756&at_medium=social&at_campaign_type=owned

8 minutes ago, RayC said:

 

"Another"? I can't recall any others.

 

Perhaps you missed that little story about Trump's tariffs? 

 

8 minutes ago, RayC said:

 

The EU and India are slated to sign a trade agreement before the end of this year.

 

If that happens, we'll be able to see just how good this is.

 

 

"Slated to".

 

"If".

 

"We'll see".

 

The EU is sloth like in it's ability to wrap up deals due to the way it's set up. I doubt it will ever happen. 

 

Thank goodness we left. 

6 minutes ago, RayC said:

Perhaps the bulk of the deal was agreed before June last year, but the tricky bits remained and the fact remains that the Tories were incapable of finalising matters despite 4 years of trying.

 

Could you provide precise details on the "tricky bits" remaining that Labour got over the line?

36 minutes ago, JonnyF said:

 

I'd imagine most of the deal was agreed before Labour came to power. 

 

Labour have been too busy freezing pensioners, hindering employers hiring people, locking up FaceBook posters and dishing out free hotel stays and iPhones to immigrants to have wrapped this up so quickly. 

 

It wasn’t.

 

 

44 minutes ago, Thingamabob said:

I suspect this was not strong UK negotiating team. Very few members of the current government, or those assisting them, have any business experience.

 

Have you even read the agreement?

5 minutes ago, JonnyF said:

 

Could you provide precise details on the "tricky bits" remaining that Labour got over the line?

 
No part of any deal is agreed until the whole deal is signed.

 

But here’s something the Labour Government have not hand to India in this deal:

 

“One of the reasons the UK India free trade deal has taken so long to reach is that India had made big demands about visas for Indian professionals and students to work and study abroad.

The British government said this deal does not include any change in immigration policy, including towards Indian students studying in the UK.”

 

https://www.bbc.com/news/articles/c99p2mlyep5o.amp

9 hours ago, Social Media said:

A provision within the deal allowing Indian workers and their UK-based employers to be exempt from paying National Insurance for up to three years has triggered accusations of a “two-tier” tax system

 

It is quite routine for agreements to include preferential tax rates, tariffs, or regulatory standards for certain sectors, companies, or investors (e.g., large firms vs. SMEs, or strategic industries)......so nothing to get excited about.

46 minutes ago, JonnyF said:

Great news. 

 

Yet another benefit of Brexit. 😊

 

 

 

 

Brexiteers opinions on the matter seem to be a bit ‘scattered’.

 

https://www.telegraph.co.uk/news/2025/05/07/labours-india-trade-deal-is-a-flagrant-betrayal-of-the-real/

51 minutes ago, JonnyF said:

Great news. 

 

Yet another benefit of Brexit. 😊

 

 

 

 

 

What was the other one?

1 minute ago, Patong2021 said:

 

Have you even read the agreement?

Only the main terms which have been widely circulated and reported. The main concern is the large  number of Indian workers permitted under the agreement to come to the UK,  and that such workers will have access to public services without making any contribution to the cost. This is why the deal was rejected by the Sunak government.

7 minutes ago, Will B Good said:

 

What was the other one?

 

Too many to mention. Let's start here.

 

10 minutes ago, JonnyF said:

 

Could you provide precise details on the "tricky bits" remaining that Labour got over the line?

 

Precise details? No. But the attached article gives an indication of what these issues might be.

 

https://www.politico.eu/article/rishi-sunak-india-trade-deal-hanging-tough/

 

Perhaps, we are both wrong in viewing this deal as a Brexit benefit? That certainly appears to be Nige's view; he believes that the deal has “sold out (British workers) to the highest degree”.

3 minutes ago, JonnyF said:

 

Too many to mention. Let's start here.

 

Zip file?

32 minutes ago, JonnyF said:

 

Too many to mention. 

 

 

Give it a go. 

Fantastic. 

 

Although still doesn't come close to the deal we had with the EU. 

 

The bet wetters who wanted Brexit now playing politics with deals we need to make. 

47 minutes ago, Will B Good said:

 

What was the other one?

 

   Blue passports 

1 hour ago, Nick Carter icp said:

 

   Blue passports 

They're black.

1 minute ago, brewsterbudgen said:

They're black.

 

   7 % Black 

Any nation that can negotiate a major trade deal outside of the increasingly irrelevant orbit of the US is doing a very smart thing. Shun them. Ignore them. Show them how much they overestimate their own importance. Ignore ignorance and foolish nonsense. 

10 hours ago, Thingamabob said:

Only the main terms which have been widely circulated and reported. The main concern is the large  number of Indian workers permitted under the agreement to come to the UK,  and that such workers will have access to public services without making any contribution to the cost. This is why the deal was rejected by the Sunak government.

 

 

Are you aware of how the exemption applies?

 

1.No, the Indians will NOT  be eligible for benefits from the national insurance system.

When British workers move to India they will continue to pay into the UK system, and when Indian workers come to Britain they will pay into their system and not the UK's. It is for a limited time period of 3 years.  Foreign workers will still be paying income taxes on  UK derived earnings in the UK. If they are paying income taxes on wages and are not VAT exempt, this means that they are indeed contributing to the support of public services, unlike many UK citizens who do not work.

 

2.  It is NOT a blanket exemption, and will only apply to listed classes of workers.

 

3. Britain has 17 similar reciprocal agreements with countries including the US, EU and Japan. No one has object to those 17 agreements. Why the upset over a similar agreement with India?  I would have sympathy to your position if you also demanded that all of the agreements be  cancelled, although the UK business groups would  disagree with you.

 

17 hours ago, RayC said:

 

Give it a go. 

 

How about this one? 

 

 

But I'm sure the EU are "working on" a similar deal. 😆

8 hours ago, Patong2021 said:

 

 

Are you aware of how the exemption applies?

 

1.No, the Indians will NOT  be eligible for benefits from the national insurance system.

When British workers move to India they will continue to pay into the UK system, and when Indian workers come to Britain they will pay into their system and not the UK's. It is for a limited time period of 3 years.  Foreign workers will still be paying income taxes on  UK derived earnings in the UK. If they are paying income taxes on wages and are not VAT exempt, this means that they are indeed contributing to the support of public services, unlike many UK citizens who do not work.

 

2.  It is NOT a blanket exemption, and will only apply to listed classes of workers.

 

3. Britain has 17 similar reciprocal agreements with countries including the US, EU and Japan. No one has object to those 17 agreements. Why the upset over a similar agreement with India?  I would have sympathy to your position if you also demanded that all of the agreements be  cancelled, although the UK business groups would  disagree with you.

 

The main point at issue is the large numbers of Indian workers who will arrive in Britain under the terms to which UK government has agreed.

17 minutes ago, Thingamabob said:

The main point at issue is the large numbers of Indian workers who will arrive in Britain under the terms to which UK government has agreed.

 

And what is the large number of Indian workers  who will arrive?  Are you aware that the agreement is in respect to workers who are temporarily transferred by their employers and does not apply to anyone off the boat or airplane?   There is no waiver of the £1000  immigration health insurance surtax. It will also benefit UK workers who work in India.