India-UK FTA To Accelerate Textile Trade Growth Over The Next Five Years

Indian exporters are set to double their apparel and home textiles trade with the United Kingdom within five to six years, signalling significant growth.

This projection comes on the heels of the recently concluded Free Trade Agreement (FTA) between India and the UK, according to a report released by credit rating agency ICRA.

FTA Implementation & Benefits

India and the United Kingdom finalised the FTA on 6 May 2025 after nearly three years of negotiations and expect to implement it in calendar year 2026 following a legal review.

Under this landmark agreement, India will gradually eliminate tariffs on 90 per cent of British goods, with 85 per cent becoming completely duty-free over a ten-year period.

In exchange, the UK will reduce tariffs on key Indian exports, ensuring that 99 per cent of India’s goods, including textiles, will enjoy zero-duty access.

At present, India-UK trade constitutes around 2 per cent of India’s total trade, indicating substantial untapped potential.

The UK is India’s 12th largest trading partner and ranks fifth in terms of sourcing apparel and home textiles from India.

In calendar year 2024, Indian exports in this sector stood at USD 1.4 billion, accounting for a 6.6 per cent share of UK textile imports.

The report anticipates that India’s share in UK apparel and home textile imports will rise to 11-12 per cent by 2027, growing at a compound annual growth rate (CAGR) of 11 per cent from 2024 to 2027.

Tariff Elimination & Competitive Edge

Currently, Indian apparel and home textiles face import duties of 8 to 12 per cent in the UK.

The elimination of these duties will place India on an equal footing with competitors such as Bangladesh, Pakistan, and Vietnam, which already enjoy duty-free access to the UK market.

Indian exporters will expand their capacities over the next 4–5 years to meet the anticipated demand in this level playing field.

As of 2024, China leads the UK market with a 25 per cent share in apparel and home textiles exports, followed by Bangladesh (22 per cent), Turkey (8 per cent), and Pakistan (6.8 per cent).

With the FTA in place, India aims to climb the ranks and capture a larger share of the UK market.

The ICRA report concludes that the FTA will not only stimulate trade volumes but also bolster India’s textile manufacturing and export ecosystem, paving the way for sustained economic growth and employment in the sector.

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