A major window of opportunity has opened for India's small and medium-sized enterprises (SMEs) in the sustainable fashion sector, thanks to the recently implemented India-UK Free Trade Agreement (FTA). This landmark agreement promises to reshape the export landscape, particularly for garment manufacturers, artisan clusters, and power loom & handloom units focused on environmentally conscious practices.

The FTA aims to reduce or eliminate tariffs on a vast majority of goods traded between the two nations, thereby leveling the playing field and making Indian sustainable fashion products more competitive in the lucrative UK market. For SMEs, this could translate into higher demand, better pricing for their unique creations, and a stronger foothold in an global market known for its growing appetite for ethical and sustainable fashion.

UK’s import dynamics

The UK is a substantial import market for textiles and apparel. In 2024, the UK's total clothing imports was almost £14.61 bn. Textile fabric import was around £5.34 bn, while fibre imports were around £378 million. Key sectors and sub-sectors within this include woven and knitted apparel, home textiles, specialty fabrics and yarns, and fashion accessories.

Importing countries and their strengths

The UK sources its textile and apparel from a numerous countries, each bringing unique strengths to the market.

China: It is the largest exporter of apparel and home textiles to the UK, with an estimated share of around 25 per cent of the import value in 2024. China possesses a large-scale manufacturing capacity, offering competitive pricing and a wide range of products. Their strength lies in mass production and established supply chains. However, concerns around labor practices and environmental sustainability are growing.

Bangladesh: Known for its large garment manufacturing industry, particularly in basic and fast fashion categories. Their competitiveness stems from lower labor costs. However, they are increasingly focusing on improving sustainability standards. Bangladesh is the second-largest exporter, with around 22 per cent of the UK's apparel and home textile import market in 2024.

Turkey: An important player with an estimated 8 per cent import share in 2024 Turkey offers a strong combination of quality, design capabilities, and geographical proximity to Europe, allowing for shorter lead times. They are competitive in mid-to-high-end apparel and home textiles.

Italy: Renowned for its high-end fashion, design expertise, and quality craftsmanship, particularly in luxury apparel, footwear, and leather goods. Their strength lies in branding, innovation, and premium materials.

India: Holds a significant position in the global textile and apparel market, with strengths in diverse raw materials (cotton, silk, wool), traditional crafts (handloom, embroidery), and a growing focus on sustainable and ethical production.

Pakistan: Held approximately 6.8 per cent of the market share in 2024.

Table: UK’s apparel & home textile imports

India's growing strength

The India-UK FTA, coupled with India's inherent strengths, can lead to good growth in the country’s sustainable fashion exports to the UK. India’s exports will get a boost because of the tariff elimination post FTA. It ma y be noted that earlier the tariffs was almost 12 per cent on garments and 16 per cent on some other textile products Reduced or zero tariffs will make Indian products more price-competitive compared to those from countries without such agreements. This is a direct boost to the profits of Indian SMEs.

Also, the UK market is increasingly conscious of environmental and social issues in fashion. Sustainable practices, ethical sourcing, and fair trade are gaining traction among consumers, aligning perfectly with the offerings of many Indian SMEs. Add to it, India's traditional textile crafts like handloom and natural dyeing inherently embody sustainable principles. Promoting these unique offerings can resonate strongly with UK consumers seeking authentic and eco-friendly products. The vast network of skilled artisans and craftspeople can produce high-quality, unique, and sustainable fashion items that cater to niche markets in the UK. The FTA provides a platform to showcase and value these skills internationally.

The Indian government too is increasingly focused on promoting sustainable manufacturing and exports. Schemes supporting textile clusters, skill development, and sustainable practices will further empower SMEs to capitalize on the FTA. India's market share in the UK is also projected to increase from the current 6-7 per cent to potentially 11-12 per cent by 2027. Meanwhile, UK businesses are actively looking to diversify their supply chains, reducing reliance on single sources. India offers a viable and ethical alternative for sourcing sustainable fashion products.

In fact, for Indian fashion SMEs, particularly those in the garment manufacturing, artisan, and power loom/handloom sectors with a focus on sustainability, the India-UK FTA is more than just a trade agreement – it's a launchpad into a significant and receptive international market. By leveraging their unique strengths in sustainable practices and traditional crafts, these businesses are poised for substantial growth and can contribute significantly to India's export economy while championing ethical fashion on a global stage.