Drinks giant Diageo today announced it was buying a controlling stake in India’s United Spirits group in a £1.28bn ($2.04bn) deal.

Under the deal, Diageo will initially acquire a 27.4% stake in USL, India’s biggest spirits company, rising eventually to a 53.4% stake.

The Johnnie Walker, Guinness and Smirnoff owner said Dr Vijay Mallya would continue in his current role as chairman of USL and work with it build the USL business, whose brands include Whyte & Mackay Scotch whisky, tapping into the trend for “premiumisation” in India.

“As a result of the agreements we are announcing today we will be well positioned to take the growth opportunities presented by a spirits market where growth is driven by the increasing number of middle class consumersis raising its stake in India’s fast-growing drinks market,” said Diageo chief executive Paul Walsh (pictured).

“USL’s number one position in local spirits together with our growing international spirits business of leading brands will enable us to grow across the consumer space as India’s increasing number of middle-class consumers look to enjoy premium and prestige local spirits brands as income levels rise.”