With volumes predicted to quadruple over the next five to six years, the recently concluded Free Trade Agreement (FTA) between India and the UK is expected to spur significant development in the apparel and home textiles trade between the two nations, according to a report by credit rating agency ICRA. The FTA is anticipated to go into effect in CY 2026, pending a legal review.
After around three years of negotiations, the UK and India signed an FTA on 6th May. Ninety per cent of British goods will have their tariffs reduced by India under the agreement, with 85 per cent of them being duty-free for ten years. As a result of Britain’s agreement to lower its tariffs on a variety of goods, 99 per cent of India’s exports to the UK are now duty-free. Given the size and potential of both economies, commerce between India and the UK now makes up around 2 per cent of India’s overall trade, highlighting an underutilised cooperation.
India presently ranks fifth in terms of clothing and home textile imports and is the UK’s 12th-largest commercial partner. Clothing and home textiles worth US $ 1.4 billion were imported by the UK from India in CY 2024, making up 6.6 per cent of all textile imports.
Additionally, with a 61 per cent market share in CY 2024, the US and the EU remain the top export destinations for Indian manufacturers of clothing and home textiles. The United Kingdom’s share remained stable at 7-8 per cent over the past five years, but it is expected to expand at a compound annual growth rate of 11 per cent between CY 2024 and CY 2027, reaching 11-12 per cent by that time.
Currently, the United Kingdom levies a tariff of 8–12 per cent on apparel and home textiles imported from India. Since 99 per cent of Indian commodities, including textiles, are now free of tariffs, additional capacity is probably going to be installed over the course of the next four to five years in order to fulfil orders.
In 2024, 25 per cent of all apparel and home textile exports to the UK came from China, with Bangladesh coming in second at 22 per cent, Turkey at 8 per cent, and Pakistan at 6.8 per cent. With zero-duty access on clothing and home textiles shipped when the FTA is implemented, India will have an even playing field in comparison to countries like Bangladesh, Vietnam, and Pakistan that already enjoy duty-free access.
