UK-India FTA: Likely effect on textiles and apparel exports of India

Why focus on textiles and apparel?

This sector is economically crucial for both nations. In India, textiles and garments are the second-largest employer after agriculture, providing over 45 million jobs and contributing significantly to export earnings. The UK, on the other hand, is one of the world’s largest import markets for apparel (about $19-20 billion annually) and British retailers’ source heavily from India. The FTA’s provisions—from tariff cuts to improved market access and streamlined regulations—are set to reshape the bilateral trade in textiles and apparel. Below, we analyse the expected impacts, projections for the next 5+ years, segment-wise outcomes, key players, and strategic steps for businesses to capitalise on the FTA.

Tariff changes under the FTA for textiles & apparel

Under the UK-India FTA, all UK import duties on Indian textiles and apparel—previously up to 12 per cent for garments and 16 per cent for some footwear and carpets—will be eliminated immediately, enhancing Indian exporters’ competitiveness. In return, India will gradually reduce its 10-20 per cent import duties on UK-origin textiles and apparel, enabling easier access for UK-made fabrics, technical textiles, and high-end garments.

The agreement also includes mutual recognition of standards and streamlined customs procedures, minimising non-tariff barriers. These measures will lower compliance costs and reduce delivery delays, especially benefiting SMEs in the fashion sector. The result is near free trade in textiles between the two countries, subject to rules-of-origin compliance.

Impact on Indian textiles & apparel exports to the UK

The UK-India FTA is set to significantly boost India’s textile and apparel exports to the UK by eliminating tariffs that previously reached up to 12 per cent. This levels the playing field against duty-free competitors like Bangladesh, helping Indian products become more price competitive. In 2023, India’s exports to the UK stood at $1.2 billion (~6 per cent market share), with apparel shipments already rising ~20 per cent year-on-year by late 2024.

Industry experts forecast a surge in UK orders for Indian garments, home linens, and made ups over the next 1-2 years. AEPC Chairman Sudhir Sekhri called the deal a “game changer,” predicting stronger buyer-supplier ties with UK brands. Overall, India’s enhanced price competitiveness and long-term market access are expected to accelerate its market share growth in the UK.

Table1: India’s Textile & Apparel Exports to UK – Baseline vs. Potential Growth

Sources: Ministry of Commerce & Industry and AEPC, Fibre2Fashion.com

(Projected values are indicative, assuming the UK import market size remains around $20-25 billion by 2030.)

India’s textile and apparel exports to the UK are expected to nearly double by 2030, aligning with the broader objective of doubling bilateral trade by the end of the decade. The primary growth drivers will be apparel—India’s largest export segment—followed by home textiles and fabrics, with detailed segmental impacts discussed.

Importantly, duty-free access not only boosts export volumes but also improves margins. Indian exporters gain a ~10 per cent cost advantage, allowing them to either lower prices to stay competitive or increase profit per unit, or both. This is particularly significant for India’s numerous SME exporters, who often operate on narrow margins. The FTA is also likely to catalyse fresh investment across the textile value chain, including factory expansions and capacity upgrades, to meet rising demand from the UK market.

Segment-wise impact analysis

Different segments within the textile and apparel sector will experience the FTA’s impact in distinct ways. Below is a breakdown by key segment:

Table 2: India’s competitors and their tariff rates for the top 10 most imported textile products in the UK before FTA

Source: F2F Analysis

Garments and apparel

Clothing (garments) is the cornerstone of India’s textile exports to the UK and stands to gain the most from the FTA. This includes ready-made garments (RMG) for men, women, and children—such as shirts, dresses, suits, and trousers, as well as fashion accessories.

Tariff Savings and Price Competitiveness: With the elimination of UK import duties (previously 8-12 per cent), Indian garments become significantly more price competitive. For example, a cotton shirt previously costing a UK buyer £5 (including tariff) could now cost ~£4.50, enhancing the attractiveness of Indian suppliers. This is a major boost for key manufacturing hubs like Tiruppur (knitwear) and Delhi-NCR (wovens), which already supply substantial volumes to European markets.

Growth in Export Volumes and Market Share: Indian apparel exports to the UK, which rose 9.4 per cent between April and October 2024, are expected to accelerate further. India currently holds around 6 per cent of the UK apparel import market, but with tariff-free access, this share could climb to 10 per cent or more. This would involve gaining ground against top suppliers like China (~21 per cent) and Bangladesh (~18 per cent), supported by India’s diverse offerings in cotton wear, ethnic and occasion wear, and fast fashion.

Expanded Product Range and Value Addition: Zero-duty access may encourage Indian exporters to broaden their product portfolios, including higher-end and more value-added garments. Expect to see increased exports of pieces featuring traditional embroidery, handcrafted details, or sustainable materials. Fast fashion retailers in the UK may also turn to Indian suppliers for quick, affordable production. Provisions for technology transfer under the FTA could further enhance product quality and innovation.

UK Apparel Imports into India: While India remains the dominant garment exporter in this bilateral trade, reduced duties could boost UK apparel sales in India—particularly luxury and designer wear. British high-street and premium brands may become more accessible and affordable for Indian consumers, creating a modest but notable two-way apparel trade.

In short, the FTA represents a transformative opportunity for India’s garment sector. It enhances market access, improves competitiveness, and supports product diversification. UK retailers benefit from a reliable and now lower-cost sourcing partner, while consumers in both countries enjoy wider choices and better prices.

Home textiles and made ups

The home textiles and furnishings segment—which includes bed linens, towels, curtains, cushion covers, blankets, rugs, and carpets—is another stronghold of India’s exports and stands to benefit from the UK-India FTA.

Tariff Elimination and Price Advantage: Previously subject to UK import duties of around 8-10 per cent (e.g. cotton bedsheets under HS 6302, towels under 6302/6307), home textile products from India will now enter the UK duty-free. This provides a major boost to leading exporters such as Welspun India, Trident, and Bombay Dyeing, many of whom already supply major UK retailers and hospitality chains. The removal of tariffs improves price competitiveness, paving the way for larger, long-term orders and enhanced margins.

Market Expansion Potential: The UK’s home fashion and interior market is substantial, with growing demand for quality cotton-based products—an area where India excels. Cost savings under the FTA are likely to help Indian suppliers deepen their presence in UK retail and institutional sectors such as hotels and hospitals. While volume growth may not match the apparel segment, steady expansion is expected. For instance, India’s ~$300 million in home textile exports to the UK could rise to ~$400-500 million in the medium term, driven by increased share in mid-to-premium segments.

Carpets and Floor Coverings: Indian carpet exports—including high-end handmade rugs and machine-made variants—will benefit significantly as UK duties (previously 4-8 per cent) are scrapped. The FTA specifically identifies carpets as a priority sector. This supports the growth of India’s artisanal and SME-based exporters, especially in traditional carpet hubs. While India may import some niche wool carpets from the UK, outbound trade will dominate.

Design Partnerships and Branding: With trade barriers removed, there is strong potential for collaboration between UK home décor brands and Indian manufacturers on exclusive collections. Indian firms may also invest in UK distribution infrastructure, such as warehouses or brand partnerships, to streamline direct-to-retail models and expand market reach.

In conclusion the FTA enhances India’s competitiveness in the UK’s home furnishings market, enabling deeper penetration into retail and hospitality channels. UK consumers can expect greater availability of Indian-made products—especially high-quality cotton towels, bedsheets, and carpets—at better prices, while Indian exporters gain smoother market access and scope for long-term growth.

Technical textiles and specialised segments

Technical textiles—engineered for specific functional uses such as industrial, medical, automotive, protective, and geotechnical applications—represent a high-potential growth area for both India and the UK. The UK-India FTA is expected to accelerate trade and collaboration in this specialised segment.

Boost to Indian Technical Textile Exports: India’s technical textile industry, though still emerging, is growing steadily with strong government support. Duty-free access to the UK allows Indian firms to tap into a sophisticated market with lower entry costs. For example, Indian manufacturers of geotextiles can now competitively bid for UK infrastructure projects, while PPE suppliers can target UK industrial buyers more cost-effectively. Although export volumes may initially be modest, these are high-value products, and even incremental growth can have a significant impact. Importantly, the FTA’s provisions for regulatory cooperation and mutual recognition of standards will help Indian exporters navigate complex compliance requirements in sectors like healthcare and construction.

Opportunities for UK Technical Textile Exports to India: The UK has advanced capabilities in technical textiles—ranging from smart fabrics and composites to specialty medical and automotive materials. Previously constrained by India’s tariffs, these products will now enjoy improved access to a rapidly growing Indian market. For example, UK firms can more competitively supply automotive textiles (e.g., airbags, seat fabrics), high-performance medical dressings, or filtration textiles. As India’s demand for such materials grows in sectors like automotive, healthcare, and infrastructure, UK suppliers can play a greater role. The FTA also supports investment flows—UK companies could establish manufacturing bases in India, leveraging ‘Make in India’ incentives while accessing the Indian and wider FTA markets.

Defence and Safety Textiles: An important sub-segment is defence and safety textiles. With partial access to India’s government procurement under the FTA, UK companies producing fire-resistant uniforms, ballistic fabrics, or high-spec safety gear may find new opportunities in Indian defence tenders. Conversely, Indian producers of tactical gear, camouflage textiles, or field tents could gain traction in the UK market or through collaboration with UK firms.

In summary, while growth in technical textiles will be more gradual than in apparel or home furnishings, the FTA lays the groundwork for long-term collaboration. Reduced tariffs, mutual recognition of standards, and potential joint ventures will facilitate trade and investment. Indian firms can import advanced UK components, add value locally, and potentially re-export finished goods, strengthening both countries’ technical textile ecosystems.

Conclusion

The UK–India Free Trade Agreement marks a transformative milestone for bilateral textile and apparel trade. By removing tariff barriers, it opens the door to expanded exports, deeper supply chain integration, and enhanced market access for both nations. Indian exporters now enjoy unprecedented entry into the UK—one of the world’s top import markets—while UK brands gain a competitive edge in India’s vast consumer landscape.

In the short term, the FTA is expected to drive a sharp rise in trade volumes: more Indian garments, home textiles, and technical fabrics in UK stores, and increased visibility of British fashion and specialty textiles in India. Projections suggest double-digit export growth, potential doubling of India’s UK apparel market share, and record highs in bilateral trade over the next 5-10 years.

Each segment stands to benefit uniquely:

• Garments will see the sharpest growth, spurring investment and job creation in India.
• Home textiles are set for steady expansion, enriching UK consumers’ choices.
• Technical textiles will grow gradually, supported by regulatory alignment and joint innovation.

The FTA also levels the playing field for India’s SMEs, enabling them to compete globally through lower costs and improved access.

Going forward, success depends on how effectively businesses capitalise on this opportunity—through strategic adaptation, compliance with quality standards, and collaborative partnerships. This agreement is more than a trade facilitation measure; it is a catalyst for long-term, inclusive growth.

Fibre2Fashion News Desk (PN)