India–UK FTA: What It Means for India’s Textile & Apparel Industry

Blog Post by : Karun Tyagi

August 2025 marks a major turning point for Indian textile exporters as the long-awaited Free Trade Agreement (FTA) between India and the United Kingdom comes into effect. But what does this mean for India’s textile and apparel (T&A) sector? Let’s unpack the before-and-after impact, backed with trade data and projections.

Background: Why the India–UK FTA Matters

Signed in July 2025, the India–UK FTA eliminates tariffs on 99% of Indian textile and apparel (T&A) exports to the UK. Negotiated over 14 rounds spanning three years, this is one of India’s most ambitious bilateral trade deals to date.

Key Sectors Covered

  • Readymade garments (RMG)
  • Home textiles
  • Technical textiles
  • Yarn and fabrics

The UK is one of the world’s top 5 importers of T&A, making this FTA a gateway opportunity for Indian manufacturers.

Textile & Apparel Tariff Exceptions (Approx. 1%)

The FTA removes duties on 99% of tariff lines in textiles & clothing. The remaining 1% (11–12 product lines)include:

  1.  Certain luxury or artisan textile goods
    Custom-made or high-fashion products (e.g. haute couture fabrics, specialty embroidery) that fall outside HS codes covered under mainstream apparel and textile provisions – likely negotiable under gradual liberalization.
  2.  Specific made-ups or crafts
    Some traditional or handcrafted categories like luxury carpets or specialty sarees under non-standard tariff codes may retain transitional duties (e.g. up to 2–3%) for a short period.
  3. Transitional exclusions or delayed phase-outs
    A few lines are subject to phased duty removal over a transition period of up to 3–5 years, rather than immediate elimination.

What Was the Situation Before the FTA?

Prior to the agreement:

  • Indian T&A exports to the UK faced tariffs ranging from 8% to 12%
  • Competitors like Bangladesh, Cambodia, and Pakistan already had duty-free access under various preferential trade programs
  • This price disadvantage meant Indian exporters had to absorb duties or lose out on competitiveness

In previous FY 2024:

  • India exported $1.79 billion worth of T&A to the UK
  • This was just 6.6% of the UK’s $27 billion annual textile import market

After the FTA: The Game Has Changed

The FTA changes the game in three critical ways:

A. Tariff Elimination

  • UK import duties on over 1,140 Indian textile tariff lines have been eliminated
  • This includes garments, carpets, bedsheets, yarns, and most technical textiles
  • Indian products are now price-competitive with duty-free suppliers

B. Export Growth Potential

India’s T&A exports to the UK are projected to rise:

YearProjected Export Value
Previous FY 2024$1.79 billion
FY 2026$2.8 billion
FY 2030$4+ billion

A compound annual growth rate (CAGR) of 13–15% is expected, driven by improved cost structures and buyer confidence.

C. Segment-Specific Benefits

  • Technical textiles projected to grow from $240 million to $1 billion by 2030
  • Home textiles (bedsheets, towels) to gain share in UK’s value-retail segment
  • SMEs and job clusters (like Tiruppur, Bhadohi, Panipat) expected to see major capacity expansion

How India Compares Post-FTA

CountryTariff Rate (UK)Status
India0%After FTA
Bangladesh0%GSP
Pakistan0%GSP
Vietnam0%UKVFTA
China12%MFN

India now joins the zero-duty club, removing its prior price handicap.

Implementation Priorities

While the FTA opens doors, success depends on execution:

  • Rules of Origin (RoO): Exporters must meet UK’s value-add rules to qualify for zero-duty
  • Compliance: UK buyers demand certifications like GOTS, OEKO-TEX, REACH, etc.
  • Capacity Building: MSMEs need scale-up support, digital documentation, and export readiness

What Exporters Should Do Next

For Manufacturers:

  • Identify UK-focused product lines (organic cotton, home textiles, technical fabrics)
  • Align with UK standards (quality, packaging, sustainability)
  • Prepare RoO documentation for duty-free access

For Brands & Traders:

  • Forge deeper partnerships with UK retailers and wholesalers
  • Explore direct-to-retail models and B2C exports via UK platforms
  • Use new cost structures to either regain market share or improve margins

Conclusion

The India–UK FTA marks a shift from tariff friction to trade acceleration. With rising U.S. tariffs (25%), this agreement offers a strategic opening for Indian exporters to expand in a zero-duty market.

From $1.8 billion to $4 billion potential
From 8–12% duties to 0%
From price pressure to parity

India’s textile sector now has a golden opportunity. It’s time to weave it into growth.

Note:

India’s Global T&A Export Landscape – Clarifying the Numbers

There are two widely referenced figures for India’s textile exports:

  • $36.6 billion – core T&A exports (garments, fabrics, made-ups, etc.) as per Ministry of Commerce for previous FY 2024
  • $44 billion – broader estimate including yarns, fibres, carpets, MMF, and technical textiles, used by export councils and market analysts for sectoral outlooks

This blog references both where contextually relevant. Export projections post-FTA are based on the broader $44 billion sector view.

Reference List – India–UK FTA Impact on T&A
Ministry of Commerce (India) – Press briefings and tariff reduction statements
🔗 https://www.pib.gov.in
Fibre2Fashion – Articles and trade projections related to textile exports under UK FTA
🔗 https://www.fibre2fashion.com/news/apparel-news/uk-india-fta-likely-effect-on-textiles-and-apparel-exports-of-india-302465-newsdetails.htm
Economic Times (India) – Reporting on sectoral gains and tariff schedules under the FTA
🔗 https://economictimes.indiatimes.com/industry/cons-products/garments-/-textiles/india-uk-fta-textile-exports-duty-free-access-trade-opportunity/articleshow/122904079.cms
ICRA Reports – Industry outlook and export potential post-FTA
🔗 https://www.icra.in
India Briefing (Dezan Shira & Associates) – Sector-specific analysis of India–UK FTA benefits
🔗 https://www.india-briefing.com/news/india-uk-fta-textile-gains-for-exporters-and-importers-38236.html
Wikipedia – India–UK Free Trade Agreement
🔗 https://en.wikipedia.org/wiki/India–United_Kingdom_Free_Trade_Agreement
Vajiram & Ravi – FTA summary and policy review
🔗 https://vajiramandravi.com/current-affairs/india-uk-free-trade-agreement-2025-key-highlights-benefits-and-strategic-impact
Times of India (Ludhiana Edition) – Industry cluster views on FTA outcomes
🔗 https://timesofindia.indiatimes.com/city/ludhiana/industry-welcomes-india-uk-trade-pact/articleshow/122939962.cms
FT.com (Financial Times) – High-level summary of deal structure (if available)
🔗 https://www.ft.com/content/e34fecb6-5b9c-452b-a80b-16768aa97eda
DGFT Export Dashboard (India) – FY2024 export data used for baseline
🔗 https://www.dgft.gov.in

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