Jaguar Land Rover, Diageo among winners as UK-India sign model trade deal

Business Standard

08-05-2025

By Satviki Sanjay, Alisha Sachdev and Shruti Srivastava
India's decision to slash tariffs on UK-made cars to whiskey as part of a sweeping trade pact could create a line of winners, including Jaguar Land Rover and Diageo Plc.
The Free Trade Agreement, announced Tuesday after three years of negotiations, will make it cheaper for UK firms to sell their whiskeys, cars, auto parts, cosmetics, biscuits, clothes and electrical machinery in the world's most populous nation. Indian exporters to the UK will benefit from lower levies on 99 per cent of products and services.
Automobiles
While the reduced tariffs — from 110 per cent to 10 per cent — will start with fossil fuels-fed cars, these will eventually be extended to the electric and hybrid vehicles over a 10-year timeline, according to information on the UK government website.
The UK will also offer Indian carmakers the opportunity to export these technologies to that country, with similar riders.
Domestic carmakers like Mahindra & Mahindra Ltd. and Maruti Suzuki India Ltd., which have invested in EV, may feel the pinch. It is unclear how these concessions will be structured and what price threshold will apply to a quota of cars that can be imported with these lower tariffs.
While this is the first time India has taken steps to liberalize its nascent EV market, it has stopped short of handing UK carmakers an immediate low-cost entry, giving local firms some runway to bulk up.
Liquor Makers
Whiskey and gin tariffs will be halved to 75 per cent before settling at 40 per cent by the 10th year of the deal, according to the pact's terms. In 2022, India imported over £200 million ($266 million) worth of whiskey from the UK, paying duty at the rate of 150 per cent.
Diageo, which makes Johnnie Walker whiskey and Tanqueray gin, may gain from this. Shares of its Indian unit, United Spirits Ltd., jumped as much as 2.8 per cent on Wednesday.
The treaty will enable 'improved accessibility and choice of scotch for the Indian consumers' in the world's largest whiskey market, Praveen Someshwar, managing director at Diageo India, said in a statement.
Elara Capital's Karan Taurani said the duty reduction will see prices of these drinks falling by 15 per cent-20 per cent, and will make premium spirits more accessible to Indian buyers.
The duty cuts could have a small negative impact on homegrown liquor brands such as Royal Ranthambore, marketed by Radico Khaitan Ltd., according to Taurani. Its shares slipped 3.6 per cent. 'Domestic players focused on upper prestige and above may see short-term aberration in growth,' he said.
Textile Makers
Clothes are the second-largest export to the UK from India, with the South Asian nation shipping £900 million worth of goods in 2024.
Apparel retailers such as Marks and Spencers and Primark are expected to shift sourcing to India from Bangladesh after this deal, according to P Senthilkumar, a partner at Vector Consulting.
Gokaldas Exports Ltd. and Welspun Living Ltd. rose 12 per cent on Wednesday while Indo Count Industries Ltd. advanced 11.3 per cent.
Medical Devices
Indian exporters would be able to sell medical devices at a lower cost in the UK.
This includes cardiac, orthopedic implants, syringes, blades, blood bags and glucometers as well as its wearables to the UK at a lower cost, Rajiv Chhibber, joint coordinator at the Association of Indian Manufacturers of Medical Devices, told Bloomberg News.
UK-based companies would be able to increase supply of electronic goods such as Magnetic Resonance Imaging machines, slicers, cancer therapeutics to India, he added.
Financial Services
'The deal will secure UK companies' ability to deliver financial services to clients in India,' the UK government said on its website.
India and the UK agreed to cooperate and innovate on financial technology services, particularly developing an efficient environment for cross-border payments. That is expected to ease international payments for tourists, students, businesses and investors.