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India–UK Free Trade Agreement: A Transformative Leap for Indian Investors

Created by Piyush Patel_ in Economic Update 7 May 2025

India–UK Free Trade Agreement: A Transformative Leap for Indian Investors

Introduction

India and the United Kingdom have successfully concluded a landmark Free Trade Agreement (FTA), announced on 6th May 2025. This FTA is a strategic step towards enhancing economic ties between the two countries, promoting trade, investment, and job creation. The agreement is expected to have a transformative impact on multiple sectors of the Indian economy, aligning with India’s vision of becoming a global economic powerhouse.

Key Insights and Highlights

Historic FTA: The India-UK Free Trade Agreement is a comprehensive deal that aims to boost bilateral trade, create jobs, and enhance global competitiveness for both nations.
Zero-Duty Exports: 99% of Indian exports to the UK will benefit from zero-duty access, enhancing the competitiveness of Indian products in the UK market.
Labour-Intensive Sector Growth: The FTA provides significant opportunities for Indian sectors such as:

Textiles
Marine Products
Leather and Footwear
Gems and Jewellery
Engineering Goods
Auto Parts and Engines
Organic Chemicals

Service Sector Expansion: Indian professionals in IT/ITeS, financial services, professional services, educational services, and other business services will gain enhanced market access.
Social Security Exemption: Indian workers in the UK are exempted from social security payments for three years under the Double Contribution Convention, making Indian service providers more competitive.

Sectoral Impact and Leading Companies

Sector	Leading Companies	Estimated Revenue Benefit (₹ Crore)
Textiles	Vardhman Textiles, Welspun India, Raymond	1,200
Marine Products	Avanti Feeds, Apex Frozen Foods, Waterbase	900
Leather and Footwear	Bata India, Mirza International, Relaxo Footwear	600
Gems and Jewellery	Titan Company, Rajesh Exports, PC Jeweller	1,500
Engineering Goods	Larsen & Toubro, Bharat Forge, Cummins India	2,000
Auto Parts and Engines	Motherson Sumi, Bosch India, Bharat Forge	1,500
Organic Chemicals	Tata Chemicals, Deepak Nitrite, Aarti Industries	1,200
IT/ITeS	TCS, Infosys, Wipro, HCL Technologies	3,000
Financial Services	HDFC Bank, ICICI Bank, Kotak Mahindra Bank	2,500
Professional Services	Deloitte India, EY India, KPMG India	1,000

Indian Listed Companies with Highest UK Revenue Exposure

Sector	Company Name	UK Revenue Contribution (FY24)*	% of Total Revenue	Key UK Business/Clients
IT/ITeS	Tata Consultancy Services (TCS)	~$2.7 billion	~15%	British Telecom, Lloyds, Barclays, NHS
IT/ITeS	Infosys	~$1.5 billion	~8%	BP, Rolls Royce, UK Govt.
IT/ITeS	HCL Technologies	~$1.1 billion	~10%	Financial, retail clients
Engineering Goods	Tata Steel	~$2.0 billion (Europe, UK major share)	~13%	Tata Steel UK, Port Talbot
Engineering Goods	Bharat Forge	~$300 million	~15%	Automotive, industrial clients
Textiles & Apparel	Arvind Ltd.	~$120 million	~10%	UK retailers (M&S, Next)
Gems & Jewellery	Rajesh Exports	~$250 million	~7%	UK jewellery chains
Leather & Footwear	Bata India	~$50 million	~6%	UK retail, exports
Auto Parts	Motherson Sumi	~$400 million	~12%	Jaguar Land Rover, UK OEMs
Financial Services	State Bank of India (SBI)	~$80 million (SBI UK)	<1%	SBI UK, NRI banking

Impact and Actions for Investors

Enhanced Export Competitiveness: Indian exporters, especially those in labour-intensive and technology sectors, will gain a significant advantage due to zero-duty access in the UK.
Rising Revenue for Leading Companies: Investors should focus on companies that have strong exposure to the UK market.
Boost for Service Sector: IT/ITeS, financial, and professional services will see increased demand from the UK.

Impact and Action for Investors

Immediate Impact

Export-oriented companies are likely to see improved margins and higher export volumes.
IT/ITeS and professional services firms benefit from easier market access and lower costs.
MSMEs and startups gain new opportunities in the UK market, especially in technology and innovation.

Recommended Actions

Increase exposure to export-driven companies in textiles, engineering, gems, and IT.
Identify mid-cap and small-cap stocks with direct UK revenue for potential outperformance.
Monitor quarterly results for UK-specific growth in sales and margins.
Consider thematic funds focused on export and global trade.

Near-Term and Long-Term Outlook

Near-Term (6–12 months)

Gradual uptick in export orders and improved quarterly results from leading beneficiaries.
Stock price momentum in major exporters and IT companies.
Monitor currency trends (INR–GBP) for short-term volatility.

Long-Term (2026–2030)

Sustained revenue growth as trade volumes double.
Job creation and skill development in export-oriented sectors.
Greater global integration for Indian companies, especially in manufacturing and services.
New investments and JVs between Indian and UK firms.

Disclosure

This blog is for informational purposes only and should not be considered as financial advice. Investors are advised to conduct their own research before making any investment decisions.