India–UK Free Trade Agreement to be a turning point in bilateral ties

The proposed India–UK Free Trade Agreement (FTA) could be a turning point in bilateral ties. “By offering duty-free access to 99% of Indian exports and reduced tariffs on 90% of UK exports, the pact could potentially double trade volumes by 2030,” says Ram Medury, Founder & CEO, Maxiom Wealth.

How do you see the proposed India–UK FTA shaping trade and investment opportunities, and which sectors stand to benefit the most from this deal in the medium term?

The proposed India–UK Free Trade Agreement (FTA) could be a turning point in bilateral ties. By offering duty-free access to 99% of Indian exports and reduced tariffs on 90% of UK exports, the pact could potentially double trade volumes by 2030.

For India, sectors like textiles, agriculture, gems, jewellery, and IT services stand to gain significantly, with job creation as a natural outcome. The UK, on its part, secures fresh opportunities in automobiles, medical devices, and beverages.

Beyond numbers, this FTA signals strategic diversification. It positions both economies for sustained growth, resilience, and deeper integration in an uncertain global trade environment.

The Q1 earnings season has shown mixed signals across sectors. From your perspective, what are the key takeaways that investors should be mindful of while shaping their portfolio strategy?

India’s Q1 earnings season has indeed delivered mixed signals, underscoring the need for sharper stock specific portfolio strategies. Midcaps stood out with robust 24% growth, while smallcaps lagged, posting an 11% decline and widespread earnings misses.

Sectorally, cement, energy, and metals drove profit growth, yet aggregate profits rose only 6% year-on-year—the weakest in three quarters. Banking and consumer staples struggled with margin pressures, while IT results reflected strong order books but are seeing demand uncertainty with the AI wave and an uncertain US economy.

With blue-chip gains highly concentrated, broad-based index investing looks less attractive. Investors should prioritise high-growth midcaps, stay selective in weaker sectors, and focus on companies with improving profitability.

There have been early signs of a revival in consumption demand. Do you believe this recovery is sustainable, and what underlying factors are driving this trend?

India’s consumption demand is showing early signs of revival, supported by both cyclical and structural drivers. Large consumer firms including HUL, Britannia, ITC, and Marico are reporting multi-quarter sales highs, reflecting strength in both rural and urban markets.

Softening inflation, now at an eight-year low, and RBI rate cuts are boosting affordability ahead of the festive season. The upcoming GST reforms with the slashing rates to 5% and 18% while cutting levies on essentials, food, electronics, and insurance will directly raise purchasing power.

Together with rising incomes, government support, and stronger demand in FMCG, autos, and electronics, these reforms position India’s consumption story for a durable medium-term upswing.

Historically, festive periods provide a boost to consumption. Given current macroeconomic conditions, do you anticipate this festive season to surpass previous years in terms of demand, or will it remain cautious?

This festive season could possibly be one of the strongest in years, powered by improving macro fundamentals and the boost from upcoming GST cuts. There are indications that over 90% of Indians plan to maintain or increase spending, with millennials and urban buyers showing the highest intent.

E-commerce and retail sales are expected to grow 20–27% year-on-year, while festive hiring could jump 15–20%. With GST reforms lowering rates on essentials, electronics, and packaged foods, consumers are likely to front-load purchases post-rollout.

Low inflation, higher incomes, and policy support together point to a festive demand surge exceeding recent years.

FII flows have been quite volatile in recent months. What global and domestic factors do you believe will dictate the direction of foreign inflows into Indian markets going forward?

FII flows into India remain highly volatile, reflecting the push and pull of both global and domestic forces. On the global side, softer US interest rates and a weaker dollar typically favour inflows, while geopolitical tensions and competing valuations in other emerging markets divert capital. Global liquidity cycles also play a decisive role, with 2025 already seeing outflows of over $15 billion.

Domestically, strong GDP growth, easing inflation, and resilient corporate earnings keep India attractive. With domestic investors (SIP monthly book nearly 30,000 crores) cushioning volatility, FIIs impact will not be major and they are expected to stay tactical, rotating into financials, telecom, and infrastructure as conditions evolve.

What are your thoughts on anticipated GST reforms, which sectors are expected to see boom?

The upcoming GST reforms, merging slabs to 5% and 18 by Diwali 2025, are set to simplify compliance and reduce tax burdens, giving a strong boost to consumption and key industries.

Automobiles, with GST on entry-level cars and two-wheelers dropping from 28% to 18%, are likely to see higher urban and rural demand. Cement and construction will benefit from lower costs, spurring infrastructure and housing activity, while consumer durables, apparel, and FMCG products become more affordable, fueling festive and discretionary spending.

E-commerce, MSMEs, and digital services will also gain from easier compliance, and banks/NBFCs may see higher retail lending. Overall I expect these reforms to drive broad-based sectoral growth across India.

EoM.