Under the agreement, India will reduce tariffs on 90 per cent of British goods, with 85 per cent becoming completely duty-free over a period of ten years.
| Photo Credit:
FRANCIS MASCARENHAS
India’s apparel and home textiles trade with the UK is poised for significant growth, with volumes expected to double over the next five to six years, driven by the recently concluded Free Trade Agreement (FTA) between the two countries, as per a report by credit rating agency ICRA.
The FTA is expected to be operational in calendar year (CY) 2026, subject to legal review.
”India’s apparel and home textiles trade with the UK is expected to double from its current levels in the next 5-6 years, owing to the recently concluded FTA between India and the UK,” the report added.
The UK and India entered into an FTA on May 6, following approximately three years of negotiations. Under the agreement, India will reduce tariffs on 90 per cent of British goods, with 85 per cent becoming completely duty-free over a period of ten years. In return, Britain has agreed to lower its tariffs on certain products, resulting in 99 per cent of India’s exports to the UK facing zero duties. Currently, India-UK trade accounts for approximately 2 per cent of India’s total trade, underscoring an underutilised partnership given the size and potential of both economies.
India is currently the 12th largest trading partner of the UK and stands in fifth position as far as apparel and home textiles imports are concerned. Apparel and home textiles imported by the UK from India stood at $1.4 billion in CY2024, representing a 6.6 per cent share of textiles imported by the UK.
Furthermore, the US and the European Union (EU) continue to be the major export markets for Indian apparel and home textiles exporters, accounting for a 61 per cent share in CY2024. While the UK’s share had remained stable at 7-8 per cent over the past five years amidst flattish growth, the same is expected to reach 11-12 per cent by CY2027, reflecting an 11 per cent CAGR between CY2024 and CY2027.
Currently, an 8-12 per cent duty is levied by the UK on apparel and home textiles imported from India. With tariffs being eliminated on 99 per cent of Indian goods, including textiles, incremental capacities are likely to be added in the next 4-5 years to execute orders.
In 2024, China was the biggest apparel and home textiles exporter to the UK with a 25 per cent share, followed by Bangladesh (22 per cent share), Turkey (8 cent share) and Pakistan (6.8 per cent share). Post-implementation of the FTA, with zero-duty access on apparel and home textiles exported, India would have a level playing field compared to the existing duty-free access nation status like Bangladesh, Vietnam, and Pakistan.
Published on May 18, 2025