India’s apparel and home textile trade with the UK is set for strong growth. According to a report by credit rating agency ICRA, trade volumes may double in the next five to six years. This surge will result from the newly finalised India-UK Free Trade Agreement (FTA), which will take effect in 2026 after legal clearance.
Significantly, ICRA called the FTA a game-changer for both countries. “Trade is expected to double from current levels in 5–6 years,” the report stated, as quoted by ANI.
Crucially, the FTA cuts barriers for Indian textile exports. Finalised on 6 May 2025 after three years of talks, the deal will reshape bilateral trade. Under the agreement, India will reduce tariffs on 90% of British goods, with 85% becoming duty-free over the next decade. In return, the UK will scrap tariffs on 99% of Indian exports, including key textile products.
At present, Indian textile exports to the UK face duties of 8–12%. The FTA will remove these tariffs. As a result, Indian firms are expected to ramp up production over the next 4–5 years to meet growing demand.
Meanwhile, the UK’s share in Indian textile exports is set to grow. In 2024, the UK imported $1.4 billion worth of textiles from India—6.6% of its total imports. India ranked fifth among textile suppliers, maintaining a 7–8% share.
Looking ahead, ICRA projects this share will rise to 11–12% by 2027. The trade is expected to grow at a compound annual rate of 11% from 2024 to 2027.
While the US and EU led Indian textile exports in 2024 with a combined 61% share, the UK now stands out as a high-potential market.
FTA Gives India an Edge Over Rivals
Furthermore, the FTA gives India an edge over regional competitors. India currently ranks as the UK’s 12th-largest trade partner. Bilateral trade accounts for just 2% of India’s total trade, showing ample room for growth.
In comparison, China led UK textile imports in 2024 with a 25% share, followed by Bangladesh (22%), Turkey (8%), and Pakistan (6.8%). The FTA will allow India to match countries like Bangladesh and Pakistan, which already benefit from preferential market access.
Overall, the India-UK FTA is expected to drive new investments in India’s textile sector. It will boost India’s position in global trade and strengthen its presence in the UK market.
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