Signed on 24th July 2025, this trade pact opens doors for India’s textile exports like never before.
A Historic Contract with Worldwide Effects
During Prime Minister Narendra Modi’s state visit to London, a comprehensive Free Trade Agreement (FTA) was signed between India and the UK. The agreement, dubbed the UK’s most important trade agreement since Brexit, is expected to increase bilateral trade by $34 billion annually. Textiles, leather, clothing, pharmaceuticals, cars, and services are among the more than 90% of traded goods that are covered.
The removal of high tariffs that previously prevented the Indian textile and apparel industry from reaching its full potential in the UK market has made it one of the largest beneficiaries, though many other sectors stand to benefit as well.
Why Textiles Are Most Important in This Transaction
Up until now, the UK had 12% tariffs on Indian textiles, which made them less competitively priced when compared to Bangladesh and Vietnam. Overnight, the FTA alters that.
Key Benefits for Textiles:
- Indian textile and apparel exporters have zero-duty access to UK markets.
- Level playing field with Southeast Asian and South Asian low-cost competitors.
- Increase in exports from major textile cities such as Panipat, Ludhiana, Surat, and Tiruppur.
- For UK retailers looking to expand outside of China, new sourcing opportunities have emerged.
This action is anticipated to increase India’s presence in Europe’s high-end markets and open up new buyer-seller alliances.
Growth in Exports and Empowerment of MSME
Early estimates suggest that over the next three to five years, India’s textile exports to the UK could increase by 30 to 45%. This agreement has significant long-term advantages for India’s extensive network of micro, small, and medium-sized businesses (MSMEs), which control the textile value chain.
- Increased employment and production in factories.
- Increased profit margins as a result of lower tariffs.
- Increased opportunities for women-led job growth in textile clusters.
- Incentives for adhering to UK standards for quality and sustainable practices.
Strength at Home Fulfils Demand Worldwide
The FTA offers advantages for imports as well as exports. India’s textile producers can now affordably import advanced equipment and materials from the UK. This might result in:
- Increased accuracy and productivity in the processing of textiles.
- Superior quality in goods targeted at high-end international markets.
- Greater incorporation into supply chains that practice sustainable and ethical sourcing.
What Companies Need to Do Right Now
This opportunity carries responsibility for textile exporters. Despite the removal of tariffs, UK compliance, packaging, and delivery standards are still very high.
- Obtain pertinent product certifications (organic, sustainable, fair trade, etc.) as an immediate priority.
- Simplify supply chains to expedite delivery schedules.
- To upgrade, participate in government outreach initiatives run by PM-MITRA, AEPC, and FIEO.
To fully benefit from this new trade architecture, exporters and SMEs must act now.
Important Takeaways for Textile Industry Participants:
- By 2030, India’s textile exports to the UK are expected to increase significantly.
- MSMEs, particularly those run by women, will be the main beneficiaries.
- India’s place in the European supply chain is altered by duty-free access.
- After Brexit, UK buyers are actively looking for sourcing options based in India.
- Long-term: more robust certification, branding, and environmentally friendly production are anticipated.
In conclusion, Indian textiles are entering a new era.
For India’s aspirations in the global textile industry, the India-UK Free Trade Agreement represents a sea change. Now that tariffs have been removed and market access has expanded, it is up to Indian exporters to take advantage of the opportunity. This is more than just a trade agreement for India’s textile industry, which is fuelled by MSMEs, rich in craftsmanship, and eager for international expansion. It’s a doorway to change.
