The India-UK Free Trade Agreement (FTA), signed on July 24, 2025, marks a pivotal moment for bilateral trade, particularly for India’s labor-intensive apparel and textile sector. This landmark agreement, formally known as the Comprehensive Economic and Trade Agreement (CETA), eliminates tariffs on 99% of Indian exports to the UK, providing duty-free access for apparel and home textiles.
With the UK being the world’s fifth-largest garment importer, this deal is poised to significantly boost India’s export competitiveness, create jobs, and enhance market share in a highly competitive global market. This article explores the implications of the FTA for India’s apparel exports to the UK, supported by the latest data and industry insights.
The UK apparel market is a robust and dynamic sector, valued at US$ 19.7 billion in 2024, reflecting its status as a key global player in garment imports. This market serves a diverse consumer base and is characterized by a strong appetite for both high-street fashion and sustainable clothing options. Its importance is underscored by its openness to international trade, further amplified by the recent FTA, which enhances export opportunities for countries like India. The competitive landscape, dominated by major exporters such as China and Bangladesh, makes the UK a critical arena for testing and expanding market presence, offering substantial economic benefits and growth prospects for emerging players.
The UK’s apparel import trends from 2019 to 2024 reveal a fluctuating yet substantial market. Total imports peaked at US$ 24.9 billion in 2019, dipped to US$ 21.0 billion in 2021 due to the pandemic, and stabilized at US$ 19.7 billion in 2024 . This decline reflects global supply chain disruptions and shifting consumer preferences, yet the market remains lucrative for exporters.
India’s apparel exports to the UK must contend with established players. The top five exporters—China, Bangladesh, Türkiye, India, and Cambodia—show varied performance from 2019 to 2024. China leads with imports rising from US$ 4.84 billion to US$ 5 billion (CAGR 0.7%), while Bangladesh grew from US$ 3.64 billion to US$ 3.92 billion despite a dip in 2020. India’s exports fluctuated, starting at US$ 1.42 billion in 2019, dropping to US$ 0.97 billion in 2020, and recovering to US$ 1.20 billion in 2024, with a market share of 6.1%. Cambodia and Türkiye also saw gains, with Cambodia’s imports increasing from US$ 0.97 billion to US$ 1.08 billion. The FTA’s zero-duty access across 1,143 tariff lines positions India to challenge these competitors, particularly Bangladesh, which previously benefited from duty-free status.
India’s apparel exports to the UK in 2024 are diverse, with women’s nightdresses of cotton dominating at 49.9%, followed by babies’ garments (9.1%) and T-shirts/singlets (7.5%). Other significant categories include women’s/girls’ dresses of cotton (7.2%), synthetic dresses (5.7%), and men’s/boy’s shirts (4.5%). This composition highlights India’s strength in cotton-based and traditional apparel, aligning with UK demand driven by its 1.9 million Indian diaspora. The FTA’s focus on duty-free access for these products, covering 11.7% of total trade, is expected to boost these segments further.
The FTA’s elimination of 8-12% tariffs is expected to double India’s apparel exports from US$ 1.4 billion in 2024 to US$ 2.8 billion by 2030, as per the UK government’s impact assessment.UK imports of textiles, apparel, and leather from India are projected to rise by approximately US$ 3.7 billion, an 85% increase over a no-FTA baseline. Specific growth includes woven apparel from US$ 753 million to US$ 1.6 billion and knitted apparel from US$ 654 million to US$ 1.13 billion by 2027, driven by duty-free access across 1,143 tariff lines.
The removal of tariffs levels the playing field with competitors like Bangladesh and Vietnam, which previously enjoyed preferential terms. Industry leaders, as reported by CNBC-TV18, highlight that the India-UK FTA could enable India to gain a competitive edge, with potential export growth exceeding US$ 2 billion, particularly in apparel and footwear, by eliminating duties and aligning India with zero-duty access.
The FTA is anticipated to create significant employment in India’s labor-intensive apparel sector. The UK’s impact assessment estimates a resource shift toward export-driven sectors, with India’s textile industry poised for a 13% CAGR over five years. Investments in garmenting capacity are expected to rise, supporting overcapacity in spinning and fabric processing, and generating jobs across manufacturing regions.
The FTA significantly boosts demand for traditional apparel, including iconic Kanchipuram silk sarees, Bhagalpur silk fabrics, and handwoven Banarasi textiles, which resonate deeply with the UK’s 1.9 million-strong Indian diaspora.This cultural connection is further amplified by the growing interest in sustainable and eco-friendly products, driven by increasing consumer awareness in the UK market.
Despite the optimistic outlook, several challenges remain. India’s apparel sector must address supply chain fragmentation, which results in higher transportation costs and longer lead times compared to competitors like Bangladesh and Vietnam. Compliance with UK regulations, including value-addition norms requiring 35-40% of value addition to occur in India for Certificate of Origin eligibility, will be essential. Additionally, India lags in categories such as winter wear and man-made fiber apparel, where Bangladesh and China hold a stronger position.
The India-UK FTA represents a game-changing opportunity for India’s apparel and textile exports, providing duty-free access to a US$ 19.7 billion market and leveling the playing field with global competitors. With projected export growth to US$ 2.8 billion by 2030 and a potential market share increase to 11-12%, the sector is set for a transformative phase. However, realizing this potential requires overcoming supply chain inefficiencies, meeting stringent UK regulatory standards, and investing in capacity and innovation. As India solidifies its position as a reliable manufacturing and export partner, the FTA paves the way for sustained economic growth and strengthened bilateral relations.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.