From Spirits to Automobiles; top stocks and sectors in focus after India-UK FTA goes live

With an aim to boost India-UK bilateral trade to $100 billion by 2030, Commerce Secretary Rajesh Agarwal has said that India and the UK will implement the Comprehensive Economic and Trade Agreement (CETA) from July 15, 2026. Bilateral trade in goods and services currently stands at around $55-60 billion. Under the agreement, several key Indian export sectors, including textiles, leather and footwear, gems and jewellery, and plastics, will gain duty-free access to the UK market from July 15.

IT stocks

After the implementation of the new CETA rules, key IT companies like TCS, Tech Mahindra, Wipro & Infosys will likely witness some cost savings. Under the new FTA, the Indian IT professionals who are on a temporary work visit to the UK are now exempted from social security contributions for five years, extended from three years previously. The exemption will help IT companies in cost savings and will aid better margins for UK-based projects.

Textile and garments

The textile & garments industry is likely to become a key beneficiary of the comprehensive trade agreement. Under the new agreement, Indian textile and garment imports are exempted from any tariffs, as compared to 4-12% earlier. The move is a major boost to Indian textile players, who are focusing on diversifying their export market away from the United States. It will also make Indian textile exports to the UK more competitive, in comparison to other textile exports like Bangladesh, Vietnam, Thailand and China.

Automobile & Auto Components

The automobile and auto components industry will witness a paradigm shift as India reduces import duties on fully built conventional vehicles from 110% to 10% in a phased manner. However, electric and hydrogen-powered passenger cars will get preferential access only from the sixth year.

Similarly, Indian automobile components will secure zero-duty access to the UK’s automobile market. Auto component categories like castings, forgings, wiring systems, automotive electronics, tyres, transmission components, etc. Similarly, many British-made automotive components will also secure zero-duty access in a phased manner.

Leather & Footwear

UK remains among the top three export markets for leather & footwear products in India. However, the country faced tariffs in the range of 4% to 12%. After the implementation of CETA, the tariffs will get completely eliminated, making Indian leather & footwear makers more competitive.

Indian spirit and beverage industry

Indian spirit and alcoholic beverage industry is expected to get more competitive with India reducing the customs duty on Scotch, Whiskey and other premium UK spirits from 150% to 75%, which will be further reduced to 40% in a phased manner, subject to a minimum import price.