Textiles to tech: Seven stocks that stand to gain from the India-UK FTA

Touted as India’s most comprehensive trade pact to date and among the UK’s most significant post-Brexit deals, the agreement supports India’s vision of Viksit Bharat by 2047 and its goal of achieving $2 trillion in exports by 2030. Bilateral trade, currently around $60 billion annually, is expected to double by the end of the decade.

Under the FTA, India will reduce import duties on 90% of tariff lines—85% of which will become fully duty-free over ten years—while 99% of Indian exports will gain duty-free access to the UK. The deal unlocks opportunities for Indian industries such as textiles, marine products, leather, toys, gems and jewellery, engineering goods, and auto components, boosting their competitiveness and driving job creation.

In light of this, we’ve identified one promising stock from each of seven key sectors poised to benefit from the agreement.

Pearl Global

The India-UK FTA is a major boost for the textiles and apparel sector, eliminating nearly all duties that previously went up to 12% on exports to the UK.

This development is expected to significantly benefit Pearl Global, a leading apparel manufacturer, whose shares jumped over 10% after the news broke.

Pearl Global produces a wide range of readymade garments—knits, wovens, and denim—across men’s, women’s, and kids’ segments. With an annual capacity of 82 million garments, it supplies to top global brands such as GAP, Kohl’s, Mango, Tommy Hilfiger, Ralph Lauren, and Zara.

About 72% of its revenue comes from exports, and with a direct presence in the UK, the company stands to gain meaningfully from the FTA. Currently, India accounts for 28% of its sales, with the UK alone contributing about ₹2.5 billion (7% of total revenue). Management expects the UK market to grow 2–3x in the next two years.

Pearl Global’s performance has been strong, with revenue growing at a 15% CAGR to ₹34.5 billion in FY24, and profit rising at 67% CAGR to ₹1.7 billion, supported by improving margins of 8.96%.

Tata Consultancy Services

Tata Consultancy Services (TCS), Asia's biggest IT firm and second-largest worldwide after Accenture, offers a wide range of services like consulting and application management to sectors including banking and healthcare.

The FTA includes a significant benefit for Indian IT professionals working in the UK: a three-year exemption from social security contributions. This could save Indian workers up to 20% of their salary, benefiting over 60,000 people each year and potentially saving the sector over ₹40 billion.

The UK is a key market for TCS, generating 16.5% of its revenue, with another 14% coming from Europe. This FTA is expected to be a positive for TCS.

TCS has shown strong financial performance in recent years, with its revenue growing by an average of 10.5% and net profit by 7.9% annually over the last five years.

Looking forward, TCS is facing some challenges due to slower demand in the US market. At the end of the last quarter (Q4 FY25), its pending orders were worth $12.2 billion. The company predicts revenue growth of 0-3% and profit margins between 20-22% for the upcoming financial year, following a slower performance in the past year.

Also read: Mint Primer | Will IT get better or worse? TCS points to cautious growth ahead

Sona BLW Precision Forging

Sona BLW is a major Indian manufacturer specialising in precision forged differential bevel gears and assemblies for vehicles. Globally, it holds a significant market share in differential gears (8.8%) and starter motors (4.4%).

A substantial portion of Sona BLW's revenue (71%) comes from exports, with Europe being its second-largest market after the US, contributing 24% to its export earnings.

The company supplies to major global automotive players, including seven of the top 10 passenger vehicle manufacturers like Tata Motors, Maruti Suzuki, John Deere, Mahindra & Mahindra, and Tesla. A significant 71% of its revenue is generated from the passenger vehicle segment, and it's a key player in the electric vehicle (EV) market, with 36% of its revenue from this sector.

The FTA, which eliminates import duties on auto parts, engines, and components, is expected to create significant export opportunities for Sona BLW. It will allow the company to export its high-value EV and conventional drivetrain components to the UK without any tariffs, enhancing its cost competitiveness and potential to secure more business in the UK market.

Sona BLW has a strong order book, valued at ₹242 billion at the end of FY25, providing good visibility for future revenue growth.

Apex Frozen Foods

Apex Frozen Foods, a major Indian shrimp processor and exporter with a strong presence in the US and EU, stands to gain from the India-UK FTA.

With the EU contributing 45% to its revenue and experiencing 73% sales growth there last quarter, the removal of tariffs on marine products like frozen shrimp to the UK (currently 0% of revenue) offers a new, competitive market for volume growth.

Also read: Trump's tariffs brings Indian shrimps and basmati to a boil

The company is also awaiting EU approval for ready-to-eat products, aiming to tap into that growing segment.

United Spirits

United Spirits (USL), a subsidiary of UK-based Diageo and India's leading beverage alcohol company, is poised to significantly benefit from the India-UK FTA.

The agreement slashes the hefty 150% duty on UK whisky to 75% immediately, with a further reduction to 40% over the next decade. This will enable USL to import Diageo's premium brands like Johnnie Walker and Smirnoff at much lower costs, potentially boosting sales volumes and improving profit margins.

While Scotch currently holds a small share of India's vast whisky market, lower duties are expected to increase its appeal and drive substantial growth, benefiting USL's portfolio of both imported and domestic brands like McDowell's.

This duty reduction is projected to increase Scotch whisky exports to India by £1 billion over the next five years, positioning United Spirits as a major beneficiary in this evolving market.

Quess Corp

Quess Corp, the biggest workforce management firm in India with a large international presence, stands to gain from the FTA even though it mainly operates within India.

The simplified visa rules and easier movement for Indian professionals, including those on contract, will make it simpler for them to work in the UK. Since workforce management is Quess Corp's main business, this increased opportunity for Indian workers in the UK directly benefits them.

Furthermore, the FTA includes a three-year break from UK social security rules and quotas for Indian workers in specific industries. This will be particularly helpful for startups and smaller businesses in the UK that rely on staffing agencies like Quess Corp.

For Quess Corp, these changes mean that sending Indian professionals to the UK for assignments will become less expensive, making them more competitive in the UK market. The company is also currently undergoing a restructuring by separating into three different businesses, a move intended to increase value for its shareholders.

Titan

Titan is India’s leading branded jewellery player, with flagship brands like Tanishq, Zoya, Mia, and Caratlane. It also dominates the domestic watch segment through brands such as Titan, Fastrack, Sonata, and Zyliss.

In FY24, jewellery accounted for 88% of Titan’s consolidated revenue and 92% of its operating profit. The company has a strong retail footprint with over 3,300 stores, including 23 overseas outlets in the Gulf, US, and Singapore.

Currently, Indian exports of gold jewellery and polished diamonds face UK import duties of 5–12%. The India-UK FTA removes these tariffs, improving Titan’s export competitiveness. While it has no stores in the UK yet, Titan plans to enter the market.

Looking ahead, the company targets 15–20% revenue growth in FY26, with jewellery margins expected to range between 11% and 11.5%. It also aims to scale its international business to $300 million and reach breakeven overseas by FY26.

Also read: What higher gold prices have meant for Titan’s Q4 performance

Conclusion

The India-UK Free Trade Agreement represents a landmark step in deepening economic ties between the two nations. It is expected to boost the UK’s GDP by £4.8 billion over the long term and expand bilateral trade by an estimated £25.5 billion annually.

India, which was the UK’s 12th-largest trading partner in 2024 with bilateral trade of £43 billion, stands to gain significantly. The deal gives Indian companies broader access to a high-income market with strong consumer demand—especially across key export sectors like textiles, auto components, marine products, and jewellery.

While the FTA opens up exciting growth avenues, investors must look beyond headlines. Evaluating company fundamentals—like financial performance, management quality, and long-term strategy—remains essential for making sound investment decisions.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com