India's trade in apparel and home textiles with the United Kingdom is set to double in volume within the next five to six years, projects a new report by the credit rating agency ICRA.
This significant growth is expected due to the recently finalized Free Trade Agreement (FTA) between the two countries, which is anticipated to become operational in calendar year 2026, pending legal review.
The UK and India concluded their Free Trade Agreement on May 6 after roughly three years of negotiations. According to the agreement's terms, India will reduce tariffs on 90 per cent of British goods, with 85 per cent becoming completely duty-free over a ten-year period.
In return, Britain has agreed to eliminate duties on 99 per cent of India's exports to the UK. Currently, the trade between the two nations accounts for only about 2 per cent of India's total trade, indicating considerable untapped potential given the economic size and capabilities of both countries.
At present, India ranks as the UK's 12th largest trading partner overall and holds the fifth position specifically for apparel and home textile imports.
In calendar year 2024, the UK imported $1.4 billion worth of apparel and home textiles from India, representing a 6.6 percent share of the UK's total textile imports.
The United States and the European Union remain the primary export destinations for Indian apparel and home textiles, collectively accounting for 61 per cent of exports in CY2024.
The UK's share has remained relatively stable at 7-8 percent over the past five years with flat growth. However, this figure is projected to increase substantially to 11-12 per cent by CY2027, reflecting a compound annual growth rate of 11 per cent between 2024 and 2027.
Currently, the UK imposes an 8-12 per cent duty on apparel and home textiles imported from India. With the elimination of tariffs on 99 per cent of Indian goods, including textiles, manufacturers are expected to significantly increase production capacity over the next 4-5 years to fulfill anticipated orders.
China currently dominates as the largest apparel and home textile exporter to the UK with a 25 per cent market share in 2024, followed by Bangladesh (22 per cent), Turkey (8 per cent), and Pakistan (6.8 per cent).
Once the FTA is implemented, India will gain zero-duty access for its apparel and home textile exports, creating a level playing field with countries that already enjoy duty-free status, such as Bangladesh, Vietnam, and Pakistan.
