Both sides celebrate the landmark agreement, which has been in place for several years.

India and the UK have agreed to a trade deal after three years of negotiations, saying their economy will boost its economy amid the consequences of tariffs by U.S. President Donald Trump.

The UK government said on Tuesday that the deal “is expected to increase bilateral trade by 25.5 billion pounds ($3.4 billion), UK GDP increased by 4.8 billion pounds ($6.4 billion) and an increase of 2.2 billion pounds ($2.9 billion) per year.

“India’s tariffs will be cut, locking in a 90% reduction in tariff lines, with 85% of which are completely exempt from tariffs for a decade.”

The UK alcohol and auto industry is some of the main beneficiaries, with tariffs and gin on whiskey reduced by 75% before dropping to 40% in the 10th year of the deal. Under quotas, the car tariff will increase from above 100% to 10%.

UK exports will also reduce tariffs, including cosmetics, medical equipment, aerospace parts, lambs, salmon, chocolate and biscuits.

The Ministry of Trade of India said that under the agreement, 99% of Indian exports will not face import taxes.

"This brings us closer to the goal of becoming a global economic powerhouse. It protects our core interests while opening up further India's participation in global value chains," said Trade Minister Piyush Goyal.

The deal introduced a “Double Contribution Conference” that exempts Indian workers in the UK from up to three years of national insurance payments and vice versa.

Advanced negotiations on separate bilateral investment treaties and further discussions on labour and environmental standards are also underway.

Prime Minister Narendra Modi and his British counterpart Keir Starmer made a call on Tuesday to commemorate the deal, and Modi invited Starmer to visit the country.

“These landmark agreements will further deepen our comprehensive strategic partnership and catalyze trade, investment, growth, job creation and innovation in both of our economies,” Modi said in an article on X.

“Strengthening our alliances and reducing trade barriers to economies around the world is part of our plan to provide a stronger, safer economic plan at home,” Stemmer said.

The two leaders are expected to meet in the coming months to sign and close the deal.

India has also tried to exempt the UK from its upcoming carbon tax, a climate policy tool planned to be implemented in 2027, but officials did not elaborate in a statement on Tuesday.

The deal is a reparation as countries around the world think about new strategies and negotiate trade agreements to compensate for tariffs imposed by the Trump administration in the United States.