Starmer slammed for tax break in India trade deal - but businesses hail '£5bn boost' to British economy
6 May 2025, 18:04 | Updated: 6 May 2025, 18:45
Keir Starmer has come under fire for the new India trade deal that will see some workers exempt from paying national insurance in the UK for three years.
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Robert Jenrick, the Conservative shadow minister, claimed that "British workers come last" in the UK under Labour, after the deal was announced on Tuesday afternoon. The agreement will be subject to a vote by MPs.
Tory shadow business minister Dame Harriett Baldwin said the deal would be "subsidising Indian labour while undercutting British workers".
Lib Dem leader Sir Ed Davey also criticised the agreement, saying that plans on national insurance included in the deal were "half-baked". He said his party would vote against the deal.
The deal, announced on Tuesday afternoon, will mean dramatic tariff reductions on scotch whisky and car exports to India, while levies on aerospace, electricals and other food products will also fall.
Read more: Sir Keir Starmer hails ‘historic day’ as UK and India sign landmark free trade deal
UK consumers are also expected to benefit from tariffs being reduced on some Indian goods such as clothing imported to the country.
Ministers said the deal would boost GDP by £4.8 billion within 15 years.
Despite the criticism, some business leaders praised the deal after it was announced.
And Cabinet minister Douglas Alexander pointed out that the agreement was reciprocal, and limited.
He said: "India is going to be one of the world's largest middle-classes in the coming decades. The agreement will only cover a very specific and limited group of Indian business people for a period of three years.
"There are other arrangements in place by the Indians that extend longer than that, that's worth recognising and the workers will be required to pay their immigration health surcharge to the National Health Service. This therefore does not affect NHS funding."
Others also criticised the deal on the grounds that it will incentivise more Indian people to come to the UK, amid immigrations levels that are already high.
Former Conservative home secretary Suella Braverman criticised the deal, saying she had blocked an agreement with India while in office "because I was not willing to grant concessions on visas".
In a post on X, formerly Twitter, she accused the Government of having "caved and opened our labour market to more Indian workers who will be cheaper to hire than Brits.
"This is not the way to cut migration or support British workers. Haven't you learnt anything from the last few days?"
Business Secretary Jonathan Reynolds said the agreement announced on Tuesday involved no changes to immigration rules, but "modest changes" to "business mobility".
UK and India agree trade deal
The deal will see Indian chefs, yoga teachers and musicians able to access the contractual services suppliers route, which had previously been closed to India, but with their numbers capped at 1,800.
In its own statement announcing the deal, the Indian government said the agreement "eases mobility for professionals", including intra-company transfers and business visitors.
New Delhi also said the deal would provide "immense opportunities for talented and skilled Indian youth" in the UK, particularly in financial and professional services.
Mr Reynolds said: "I want to be clear, there is no impact on the immigration system of the deal that we have agreed, there's no changes or even the guarantee of existing provision on things like student visas, which I know there has been a lot of speculation about."
He later added: "I know there's been a lot of speculation on post-study work visas, on youth mobility, on specific visas for healthcare workers: just to confirm, that is not changing at all as part of this deal."
Indian nationals already account for the highest proportion of work visas and the second highest proportion of study visas issued to people applying to come to the UK.
In 2024, some 81,463 work visas were issued to Indian nationals, 22% of the total number of work visas, including 30,301 health and care worker visas.
However, last year also saw the number of work visas issued to Indian nationals fall by 50%, most likely due to changes to immigration rules banning overseas care workers from bringing family dependents and increasing the salary threshold for skilled workers.
The number of study visas issued to Indians also fell last year, from 159,371 in 2023 to 92,355 in 2024.
Is the UK too generous to migrants?
Meanwhile some business leaders reacted positively to news of the deal.
Lord Karan Bilimoria, founder of Cobra Beer and chair of the International Chambers of Commerce UK, said he was "over the moon".
He told LBC News' Charlotte Lynch: "This has been a very, very difficult deal to negotiate. 14 rounds of negotiations between ministers, prime ministers over the years and we finally got there and this is great news because India has overtaken the UK.
The UK is the sixth largest economy in the world. India actually today is now the fourth largest economy in the world, narrowly overtaking Japan. And India is the fastest growing major economy in the world and yet India is only the 11th largest trading partner of the UK.
"I think that this deal will turbocharge our bilateral trade in goods and services which stands at about 42 billion pounds today. And I think within five years the this will double to over 80 billion pounds.
"And it's great news for British businesses and the British economy and for Indian businesses".
Mark Kent, chief executive of the Scotch Whisky Association, called the deal a "landmark moment" which will be "transformational for the industry".
He said it has the potential to increase Scotch Whisky exports to India by £1bn over the next five years.
Prime Minister Sir Keir Starmer said: "We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK's economy, putting more money in working people's pockets."
He added: "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."
Indian prime minister Narendra Modi described it as a "historic milestone" and an "ambitious and mutually beneficial" trade agreement that will "catalyse trade, investment, growth, job creation, and innovation in both our economies".
"I look forward to welcoming PM Starmer to India soon," he added.
