NEW DELHI: India’s trade in apparel and home textiles with the United Kingdom is set for significant growth, with volumes expected to double over the next five to six years, according to a report by credit rating agency ICRA. The projected surge is attributed to the recently concluded Free Trade Agreement (FTA) between the two countries, which is slated to take effect in calendar year (CY) 2026, pending legal review.
“The trade is expected to double from current levels within the next 5-6 years, driven by the FTA between India and the UK,” the report said, as quoted by news agency ANI.
The FTA, finalised on May 6 after three years of negotiations, marks a major milestone in bilateral economic relations. Under the agreement, India will reduce tariffs on 90 per cent of British goods, with 85 per cent becoming duty-free over the next decade. In return, the UK will eliminate tariffs on 99 per cent of Indian exports, including textiles.
Currently, India-UK trade accounts for just 2 per cent of India’s total trade, reflecting significant untapped potential. India is the UK’s 12th-largest trading partner and ranks fifth in apparel and home textiles imports. In calendar year 2024, the UK imported textiles worth $1.4 billionfrom India, making up 6.6 per cent of its total textile imports.
While the US and European Union remained the top destinations for Indian apparel and home textiles—accounting for 61 per cent of exports in CY2024—the UK’s share has held steady at 7-8 per cent. However, this is projected to rise to 11-12 per cent by CY2027, representing a compound annual growth rate (CAGR) of 11 per cent from CY2024 to CY2027.
At present, the UK imposes an 8-12 per cent duty on Indian textile imports. The FTA’s implementation, which will eliminate duties on nearly all Indian textile products, is expected to drive investment in additional production capacity over the next 4-5 years.
In 2024, China led UK apparel and home textile imports with a 25 per cent market share, followed by Bangladesh (22 per cent), Turkey (8 per cent), and Pakistan (6.8 per cent). India’s new duty-free access will place it on par with competitors such as Bangladesh, Vietnam, and Pakistan, which already benefit from preferential trade terms with the UK.
“The trade is expected to double from current levels within the next 5-6 years, driven by the FTA between India and the UK,” the report said, as quoted by news agency ANI.
The FTA, finalised on May 6 after three years of negotiations, marks a major milestone in bilateral economic relations. Under the agreement, India will reduce tariffs on 90 per cent of British goods, with 85 per cent becoming duty-free over the next decade. In return, the UK will eliminate tariffs on 99 per cent of Indian exports, including textiles.
Currently, India-UK trade accounts for just 2 per cent of India’s total trade, reflecting significant untapped potential. India is the UK’s 12th-largest trading partner and ranks fifth in apparel and home textiles imports. In calendar year 2024, the UK imported textiles worth $1.4 billionfrom India, making up 6.6 per cent of its total textile imports.
While the US and European Union remained the top destinations for Indian apparel and home textiles—accounting for 61 per cent of exports in CY2024—the UK’s share has held steady at 7-8 per cent. However, this is projected to rise to 11-12 per cent by CY2027, representing a compound annual growth rate (CAGR) of 11 per cent from CY2024 to CY2027.
At present, the UK imposes an 8-12 per cent duty on Indian textile imports. The FTA’s implementation, which will eliminate duties on nearly all Indian textile products, is expected to drive investment in additional production capacity over the next 4-5 years.
In 2024, China led UK apparel and home textile imports with a 25 per cent market share, followed by Bangladesh (22 per cent), Turkey (8 per cent), and Pakistan (6.8 per cent). India’s new duty-free access will place it on par with competitors such as Bangladesh, Vietnam, and Pakistan, which already benefit from preferential trade terms with the UK.
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