India’s apparel and home textiles trade with the United Kingdom is projected to double in volume over the next five to six years, according to a new report from credit rating agency ICRA. This significant growth trajectory is attributed to the recently concluded Free Trade Agreement between the two nations, which is expected to become operational in calendar year 2026, pending legal review.
The UK and India finalised their Free Trade Agreement on May 6 after approximately three years of negotiations. Under the terms of the agreement, India will reduce tariffs on 90 percent of British goods, with 85 percent becoming completely duty-free over a ten-year period.
In exchange, Britain has agreed to eliminate duties on 99 percent of India’s exports to the UK. Currently, bilateral trade between the two countries represents only about 2 percent of India’s total trade, indicating substantial untapped potential given the size and economic capabilities of both nations.
At present, an India rank as the UK’s 12th largest trading partner overall and holds the fifth position specifically in apparel and home textiles imports. In calendar year 2024, the UK imported USD 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 European Union remain the primary export destinations for Indian apparel and home textiles, collectively accounting for 61 percent 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 percent by CY2027, reflecting a compound annual growth rate of 11 percent between 2024 and 2027.
Currently, the UK imposes 8-12 percent duty on apparel and home textiles imported from India. With the elimination of tariffs on 99 percent of Indian goods, including textiles, manufacturers are expected to add significant production capacity over the next 4-5 years to fulfil anticipated orders.
China currently dominates as the largest apparel and home textiles exporter to the UK with a 25 percent market share in 2024, followed by Bangladesh (22 percent), Turkey (8 percent), and Pakistan (6.8 percent).
Once the FTA is implemented, India will gain zero-duty access for its apparel and home textiles exports, creating a level playing field with countries that already enjoy duty-free status such as Bangladesh, Vietnam, and Pakistan.
