Tariffs on Scotch whisky exports to India are set to be halved under a landmark Free Trade Agreement (FTA) between the United Kingdom and India. The deal, which is expected to be formally signed in London later this month, represents a significant breakthrough in trade relations between the two nations. UK government sources have confirmed that duties on Scotch will fall from 150 percent to 75 percent immediately, with further reductions to 40 percent over the next decade.
The Scotch Whisky Association (SWA) has described the agreement as “transformational,” predicting an export boost of £1 billion (₹11,501.1 crore) over the next five years. This positions India as one of the industry’s most important growth markets. “The UK‑India Free Trade Agreement is a once-in-a-generation deal and a landmark moment for Scotch Whisky exports to the world’s largest whisky market,” said Mark Kent, Chief Executive of the SWA.
Broader Implications of the Trade Deal
The tariff reductions on whisky are part of a broader breakthrough achieved during final negotiations held in New Delhi between April 22 and 26. These negotiations also addressed longstanding Indian demands on labor mobility and social security exemptions for professionals on temporary assignments. The compromise includes a youth mobility scheme allowing 3,000 young professionals from each country to live and work abroad for up to two years. Additionally, there is a provision exempting seconded Indian workers from paying into the UK’s National Insurance system for three years.
The agreement, announced in principle on May 6, is one of the most comprehensive trade deals signed by either country. It will eliminate tariffs on 99 percent of Indian exports to the UK, including textiles, apparel, pharmaceuticals, and gems. In return, 90 percent of UK exports to India will see phased tariff reductions over a 10-year period, benefiting sectors such as automobiles, medical devices, aerospace components, and legal services.
Domestic Reactions and Criticisms
Despite support from business groups and both governments, the deal has faced criticism within the UK, particularly over the tax exemptions for seconded Indian workers. “This is two-tier taxes from two-tier Keir,” said Kemi Badenoch, Leader of the Opposition and head of the Conservative Party, referring to Labour Prime Minister Keir Starmer and the National Insurance exemption provision. “It basically encourages workers from India but does not provide the same benefit to UK citizens. Indian workers will pay 20 percent less tax than Brits doing the same jobs. That’s not a trade deal — that’s betrayal,” said Nigel Farage, leader of Reform UK.
A UK Treasury analysis leaked to the British media estimates the tax break could cost the UK up to £200 million annually in lost revenue. However, the deal is expected to double annual bilateral trade to $100 billion by 2030, and UK officials estimate it could add £4.8 billion to GDP and £2.2 billion in wage growth over the next decade.
Strategic and Economic Significance
Beyond economic benefits, the FTA is being billed as a post-colonial reset between two democracies with shared interests in the Indo-Pacific, digital regulation, and strategic supply chains. Prime Minister Narendra Modi is expected to visit the UK later this month to attend the formal signing ceremony. While the exact details of his itinerary have not been confirmed, sources hint that he may be hosted at Buckingham Palace and could address Parliament — though neither event has been officially announced.
This will not be Modi’s first visit to the UK. He previously visited in 2015 and again in 2018, including appearances at Wembley Stadium and meetings with British prime ministers. His upcoming trip, however, is being closely watched as a potential capstone to years of trade negotiations and a signal of reset in India–UK relations.
The formal ratification of the FTA will follow later, with side agreements on investment protection and carbon-related trade expected to be finalized by the end of the year. As the two countries prepare to implement this ambitious deal, the world watches closely to see how it will reshape economic and diplomatic ties between the UK and India.
