UK, EU and now US: Why India has become world's new trade magnet

With the signing of the three major trade agreements, India has now secured preferential or near-preferential access to nearly every major developed market, including Australia, EFTA, and New Zealand. For global buyers facing geopolitical fragmentation, supply chain disruptions and sustainability pressures, India now offers scale, compliance and market access unmatched by any other emerging economy.

US: Tariff relief revives India’s largest apparel market

The latest India-US trade deal, announced by President Donald Trump and slashing tariffs on Indian goods to 18 per cent, delivers immediate relief to Indian exporters, especially apparel manufacturers, for whom the US remains the largest export destination. Industry estimates suggest the tariff reset provides Indian suppliers with a 2 per cent competitive edge over peer sourcing nations, easing margin pressure and reviving stalled capacities.

Textile and apparel exporters say the deal is transformational at a time when US buyers are actively diversifying away from over-concentrated sourcing hubs. With reduced tariffs, India’s vertically integrated textile base from fibre to fashion stands to gain fresh orders, faster replenishment cycles and renewed investments.

EU: Zero-duty access ends a long-standing disadvantage

Only last week, on January 27, 2026, India concluded its most ambitious trade deal ever with the EU, creating a free trade zone of nearly 2 billion people. For Indian apparel exporters, the agreement removes a structural handicap that had eroded market share for years. Indian garments historically faced 9-12 per cent import duties in the EU, while competitors such as Bangladesh, Vietnam and Turkiye enjoyed duty-free or preferential access. With tariffs now set to be dismantled, exporters anticipate improved buyer sentiment, stronger order inflows and new investments across spinning, weaving, garmenting and finishing.

The EU is India’s second-largest apparel export destination, accounting for over $4.5 billion in annual shipments. The deal is expected to trigger a structural reset in India’s textile trade dynamics, particularly as the agreement includes strong commitments on sustainability, labour rights and climate action, areas where Indian suppliers already meet stringent compliance norms.

UK: Nearly 100 per cent duty-free access unlocks growth

The India-UK Free Trade Agreement (FTA), signed in July 2025, was the first major breakthrough in this trade push. Under the deal, 99 per cent of Indian exports receive duty-free access to the UK, directly benefiting labour-intensive sectors such as textiles, apparel, leather and footwear.

The UK imports nearly $27 billion worth of textile and apparel products annually. India, currently the fourth-largest supplier with a 6.6 per cent share, is expected to significantly expand its presence as tariffs drop to zero. Industry estimates suggest India’s exports of technical textiles alone could rise from $240 million to over $1 billion by 2030.

Beyond the big three: Growing lattice of FTAs with advanced economies

India’s appeal extends well beyond the US, EU and UK, effectively completing the list of major developed economies with which it has signed FTAs over the past year, barring Canada, where a deal may also be announced soon. Canada’s Prime Minister Mark Carney is expected to visit India in the first week of March as part of Ottawa’s push to diversify its trade and strategic alliances beyond the US, its largest trading partner.

In October 2025, the India-European Free Trade Association (EFTA) Trade and Economic Partnership Agreement (TEPA) came into force, bringing Switzerland, Norway, Iceland and Liechtenstein into India’s trade orbit. The pact includes an unprecedented $100 billion investment commitment over 15 years, expected to generate one million direct jobs, many in manufacturing.

India has also strengthened ties with Australia through the Economic Cooperation and Trade Agreement (ECTA), signed in December 2022 and effective January 1, 2026. The agreement eliminates tariffs on 100 per cent of Australian tariff lines for Indian exports, boosting competitiveness in textiles, apparel and other key sectors. India’s exports to Australia reached approximately $8.58 billion in FY2024-25, up 8 per cent from the previous year, while total bilateral trade grew to $24 billion in 2023-24. The ECTA is expected to further support micro, small and medium enterprises (MSMEs), increase export volumes, and help both countries achieve a target of AUD 100 billion in trade by 2030.

In December 2025, India concluded an FTA with New Zealand, granting zero-duty access across all tariff lines. Indian textile and apparel exports, currently around $103 million, are expected to accelerate in New Zealand’s $1.9 billion apparel market, benefiting MSMEs, artisans and women-led enterprises.

Why India and why now?

Trade experts say India’s sudden magnetism lies in a convergence of factors, including its scale of manufacturing, improving ease of doing business, strong compliance with sustainability norms, and the geopolitical need for reliable alternatives to highly concentrated supply chains.

For the global textile and apparel industry, where tariffs, speed and compliance determine sourcing decisions, India’s expanding FTA network has fundamentally altered the competitive landscape.

Industry bodies also point out that India’s unique position of maintaining strong trade relations with the US, EU, UK, Russia, the Middle East and Oceania strengthen long-term export visibility for apparel and home textiles, with industry leaders noting that the country is transitioning from a supplementary sourcing market to a primary anchor in global supply chains.

Fibre2Fashion News Desk (CG)