India-UK FTA: JLR, Diageo among winners of model trade deal

Time of India

09-05-2025

HighlightsIndia has agreed to slash tariffs on United Kingdom-made cars and whiskey as part of a comprehensive trade agreement, making it cheaper for UK companies to sell a variety of goods in India. The deal will reduce whiskey and gin tariffs from 150 per cent to 75 per cent, eventually settling at 40 per cent after ten years, providing a significant opportunity for Diageo Plc, which produces Johnnie Walker whiskey and Tanqueray gin. The trade agreement is expected to enhance India's competitiveness in the textile sector, allowing Indian apparel exporters to better compete against countries like Bangladesh and Vietnam, with companies such as Gokaldas Exports Limited and Welspun Living Limited seeing stock price increases.
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.
The deal saw India opening up some of its most protected sectors — cars for instance — and sets a precedent for other trade pacts under discussion, including with the European Union and the US. Such bilateral agreements also provide a cushion against the tariffs pain inflicted by US President Donald Trump.
UK-India Trade by Commodity and Services
The trade pact might kick in after a year, DBS Bank Ltd. Economist Radhika Rao wrote in a May 7 note. Bilateral commerce is expected to nearly double in a few years from $21 billion in the year ended March 2024, she wrote.
As exporters and companies await the fine print of the deal, here's a quick list of probable winners and losers:
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.
Beneficiaries may include
JLR
and other luxury brands with factories in the UK such as Bentley, Aston Martin, Vauxhall and Mini.
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 liberalise 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%-20%, 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%. '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.
The removal of tariffs will enhance India's competitiveness against countries like Bangladesh and Vietnam, according to the Federation of Indian Export Organisations.
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%.
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.