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The UK and India have signed a trade deal three years in the making in a move praised by trade banks for broadening opportunities during a period of global trade uncertainty.

It is the largest deal the UK has signed since leaving the EU, according to UK officials, and is expected to increase bilateral trade between the world’s fourth and sixth-largest economies by an estimated £25.5bn by 2040.

Industry associations and banks alike have reacted positively to the deal, which will cut 90% of Indian tariffs on British goods, and eliminate UK tariffs on 99% of Indian goods.

“At a time of heightened global uncertainty, the need for trusted partnerships is clear,” says Mark Tucker, group chairman of HSBC. “There is huge future potential for both India and the UK through this ambitious economic agreement.”

HSBC has expanded its role in UK-India trade this year, reporting the volume of documentary trade by HSBC UK clients with India rose 24% between March 2024 and 2025.

Business and trade secretary Johnathan Reynolds also notes the particular importance of the deal’s timing, saying: “In times of global uncertainty, a pragmatic approach to global trade that provides businesses and consumers with stability is more important than ever.”

Economic uncertainty is being driven in large part  by the US’ unpredictable trade tariffs, which currently sit at 10% on both the UK and India. The UK and India both exported more to the US than to any other country in 2023, at US$59.7bn and US$85.5bn respectively.

A key component of the free trade agreement for UK manufacturers may be the 90% reduction of Indian automotive tariffs, which now stand at 10%. Cars were the UK’s top export in 2023, but a fifth of them were sold in the US, which has since placed a 25% tariff on such imports.

Standard Chartered’s UK chief executive, Saif Malik, praised the deal, saying it will “create new opportunities for UK and Indian businesses, enable greater access to one of the world’s largest and most dynamic markets, and drive growth and innovation across the UK-India corridor”.

William Bain, head of trade policy at the British Chambers of Commerce, an association representing 50,000 UK businesses, says the deal is “a huge boost to our economies and a welcome lift for our exporters”.

“Against the backdrop of mounting trade uncertainty across the globe, these tariff reductions will be a big relief. Products from Scotch whisky to clothing will benefit and this will give UK companies exporting to India a clear edge on increasing sales.”

A source close to the deal tells GTR the agreed text does not grant India exemptions from the UK’s forthcoming Carbon Border Adjustment Mechanism (CBAM).

The mechanism will place carbon prices on emissions-intensive goods, functioning similarly to the EU’s programme with the same name.

CBAM had proven a major sticking point for the deal, with the Indian Express reporting on May 6 that India sought to inset a “rebalancing mechanism” allowing Indian businesses to recoup losses attributable to the regulation.

As of press time, the text of the agreement has not been published.