India’s apparel and home textiles trade with the United Kingdom is expected to double by 2030, following the recently concluded Free Trade Agreement (FTA) between the two countries, according to a new report from credit rating agency ICRA.
The landmark deal, finalized on May 6 after nearly three years of negotiations, is projected to come into force by calendar year 2026, pending legal review. It marks a pivotal step toward deeper trade integration, offering duty-free access for a vast majority of Indian textile exports to the UK.
Under the agreement, India will gradually reduce tariffs on 90% of British goods, with 85% becoming entirely duty-free over a ten-year period. In return, the UK will eliminate tariffs on 99% of Indian exports, including apparel and home textiles.
Massive Growth Potential
Despite their strong bilateral ties, trade between the UK and India currently accounts for just 2% of India’s total trade, indicating considerable room for growth. In 2024, the UK imported $1.4 billion worth of Indian apparel and home textiles—6.6% of its total textile imports. India ranks fifth among the UK’s suppliers in this category.
While India’s primary export markets for textiles remain the United States and the European Union—accounting for 61% of exports in 2024—the UK’s share is poised to grow from a steady 7–8% in recent years to 11–12% by 2027. ICRA projects a compound annual growth rate (CAGR) of 11% in UK-bound textile exports from India between 2024 and 2027.
Level Playing Field
Currently, Indian textile exports to the UK face 8–12% import duties. The removal of these tariffs under the FTA will place India on equal footing with competitors like Bangladesh, Vietnam, and Pakistan, which already benefit from preferential trade terms.
With India gaining zero-duty access, the report anticipates an increase in production capacity over the next four to five years as manufacturers gear up to meet growing UK demand.
Competitive Landscape
China remains the UK’s top textile supplier, holding a 25% market share in 2024, followed by Bangladesh (22%), Turkey (8%), and Pakistan (6.8%). India’s new zero-duty access is expected to enhance its competitiveness in this landscape, helping it gain market share in one of Europe’s most important retail destinations.
The FTA is widely seen as a strategic move that could boost bilateral trade, enhance supply chain resilience, and solidify India’s role as a global textile powerhouse.
