The Indian credit rating agency ICRA foresees that India UK textile exports will witness a doubling in volume over the next five to six years, following the implementation of revised tariffs. This anticipated growth is likely to drive the establishment of additional production capacities within four to five years to accommodate the rising orders from the UK.
After three years of negotiations, India and the United Kingdom finalized a free trade agreement (FTA) on May 6. While the primary terms have been agreed upon, the FTA is expected to come into effect by 2026, pending legal and procedural reviews.
Currently, the United Kingdom levies an 8-12 per cent duty on apparel and home textiles imported from India. Under the FTA, tariffs on 99 per cent of Indian goods, including textiles, have been abolished.
According to ICRA, the conclusion of the FTA is likely to encourage investments in the apparel and home textile industries, create employment opportunities, and enhance exporters’ profits through a more diversified product portfolio.
Over the past five years, the UK’s share in India UK textile exports remained steady at 7-8 per cent, despite minimal growth. However, this share is projected to increase to 11-12 per cent by 2027, reflecting an 11-per cent compounded annual growth rate (CAGR) between 2024 and 2027.
In 2024, China was the leading exporter of apparel and home textiles to the UK, with a 25 per cent market share, followed by Bangladesh (22 per cent), Turkey (8 per cent), and Pakistan (6.8 per cent).
With the FTA granting zero-duty access to Indian apparel and home textile exports, India will gain a level playing field with other nations like Bangladesh, Vietnam, and Pakistan, which currently enjoy duty-free access, noted ICRA.
India’s apparel and home textile exports to the UK showed a year-on-year growth of 6 per cent in 2024 and 7 per cent during the first two months of 2025.
To meet the growing demand, the Indian textile industry is expected to invest in expanding its garmenting capacities. On the upstream side, such as spinning and fabric processing, investments are expected to be limited due to existing surplus capacity, ICRA observed.
The elimination of import duties by the UK is set to significantly enhance the competitiveness of Indian apparel exporters, with manufacturing hubs like Tiruppur, Surat, and the Delhi NCR region seeing increased export activity.
Furthermore, UK-based retail giants are likely to expand their sourcing from India, leveraging cost advantages and diversified product offerings facilitated by the FTA. This shift will benefit Indian suppliers by boosting their revenues and strengthening their position in the global apparel industry, ICRA highlighted.
