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With 99% of Indian exports now enjoying duty-free access to the UK under a landmark free trade agreement (FTA), investors are scrambling to position themselves as sectors from textiles to technology prepare for an export bonanza that could double bilateral trade to $120 billion by 2030.
While investors had already priced in most of the impact of the FTA in the run-up to the signing of the deal, the impact was visible in textile stocks during the day, which rallied up to 6%.
"India will benefit from duty-free access for 99% of its exports to the United Kingdom, thus bolstering essential sectors such as textiles, leather, gems and jewellery, and agriculture," said Prashant Tandon, Executive Director at Waterfield Advisors. The deal is projected to "elevate trade by an estimated $34 billion annually," with current bilateral trade valued at $60 billion set to explode higher.
The stakes couldn't be higher. This comprehensive agreement marks India's first major trade pact with a developed economy, arriving at a moment when global trade wars and tariff uncertainties are reshaping supply chains worldwide.
Textiles lead the charge
The textile sector emerged as the immediate winner, with the agreement eliminating crippling 10-12% duties that had handicapped Indian exporters against Bangladesh, Pakistan, and Cambodia. The UK represents India's third-largest textile export market, yet India currently supplies only $1.79 billion worth to a $26.95 billion market, signaling massive untapped potential.
"Among those most poised to benefit is India's textile and garment industry, which is projected to double exports to the UK over the next five to six years, driven by an anticipated 11% CAGR," analysts said. "For emerging sectors like recycled polyester and circular textiles, this deal opens a new frontier."
Zero-duty access covers 1,143 textile tariff lines, with India expected to capture at least 5% additional market share within two years.
Also Read | Trident, other textile stocks rally up to 6% on India-UK FTA
Chemical exports set for 40% explosion
The chemical sector is bracing for perhaps the most dramatic transformation, with exports to the UK projected to surge 30-40% to an estimated $650-750 million in 2025-26. This represents a quantum leap for an industry already targeting aggressive global expansion.
Pharma giants get European foothold
Indian pharmaceutical companies, already dominant in generics, are poised to strengthen their grip on Europe's largest market outside the EU. The zero tariff provisions under the FTA are expected to significantly enhance the competitiveness of Indian generics in the UK market, which remains India's largest pharmaceutical export destination in Europe.
Tech & electronics eye double-digit growth
The technology transformation could be equally dramatic. Software and IT-enabled services, currently worth $32 billion in 2024-25, are projected to achieve 15-20% annual growth under ambitious UK commitments. Electronics exports are set to accelerate with zero-duty access for smartphones, optical fiber cables, and inverters.
Spirits industry faces import revolution
In a twist that could reshape India's premium alcohol market, import duties on spirits will plummet from 150% to 75% and then 40% over a decade. This dramatic reduction will slash costs for companies importing Scotch whisky while intensifying competition in the premium segment.
"This is a positive for listed spirit companies, as they import significant quantities of scotch from the UK, both as a finished product and as raw material for blending in Indian whiskies," Jefferies noted in an earlier report. For United Spirits, the duty reduction "makes Scotch more competitive in the Indian market, probably giving a much-needed volume respite."
Jewellery, agriculture target high growth
The gems and jewelry sector, with current UK exports of $941 million, is targeting a massive expansion into the UK's $3 billion annual jewelry import market. Tariff relaxations are projected to double India's gems and jewelry exports to the UK within 2-3 years.
Agricultural exports are expected to surge over 20% in the next three years, with duty-free access for fruits, vegetables, cereals, spices, and processed foods contributing to India's ambitious $100 billion agri-exports target by 2030.
What experts say
"The India-UK FTA, which is India's first comprehensive trade agreement with a major developed country, has two implications from the market perspective," said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. "One, this FTA will significantly boost trade between both countries, which will be seen as a positive by the market. Two, this FTA along with many other FTAs signed by India with other countries, projects India as a nation committed to free trade."
Crucially, Vijayakumar added that the deal's timing "during a time of tariff wars is commendable, and hopefully this will improve India's chances of striking a fair-trade deal with the US."
"This is a transformative economic partnership agreement that will open up nearly 100% of trade between the two dynamic economies," said Agneshwar Sen, Trade Policy Leader at EY India. "This agreement is not just about trade—it's a bold step toward inclusive, sustainable, and future-ready economic cooperation. The first time India is walking outside its known comfort zone to enter into a wide-ranging agreement with a major developed economy."
The comprehensive nature of the deal extends beyond merchandise to services trade, with Indian professionals benefiting from relaxed visa norms and a landmark social security agreement.
