New Delhi: India’s textile and apparel industry is poised for a major breakthrough in the British market as the India-UK Comprehensive Economic and Trade Agreement (CETA), which came into force on July 15, removes a long-standing tariff disadvantage that had constrained Indian exporters for years.
By granting duty-free access to one of the world’s largest apparel markets, the agreement is expected to unlock an estimated $1.6 billion in additional annual exports over the medium term, significantly strengthening India’s competitive position against leading suppliers such as China, Bangladesh, Vietnam, Pakistan and Cambodia.
The United Kingdom imported nearly $26 billion worth of textiles and apparel in calendar year 2025, making it one of the world’s most lucrative consumer markets. Until now, Indian products entered Britain under the Most Favoured Nation (MFN) tariff regime, with textile products attracting import duties of around 8 per cent, while clothing and apparel faced tariffs of up to 12 per cent.
In contrast, competitors including Bangladesh, Pakistan and Cambodia already enjoyed preferential or duty-free market access through various trade arrangements, leaving Indian exporters at a pricing disadvantage despite their strong manufacturing base.
Duty-Free access reshapes competition
With the CETA now operational, Indian textile and apparel exports will enter the UK duty-free, placing Indian manufacturers on an equal, or in several segments, stronger, competitive footing than many existing suppliers.
Current trade figures show China remains Britain’s largest textile and apparel supplier with exports valued at $6.8 billion, followed by Bangladesh ($4.8 billion), Turkiye ($1.8 billion), India and Pakistan ($1.7 billion each), while Vietnam and Cambodia each exported around $1.3 billion worth of products to the UK during 2025.
Collectively, these countries account for well over 60 per cent of Britain’s textile and apparel imports, making them the principal markets from which India is expected to gain market share under the free trade agreement.
India currently exports around $1.7 billion worth of textiles and apparel to the UK, representing roughly 6.5 per cent of Britain’s total imports in the sector.
Industry estimates suggest that if Indian exporters capture merely 10 per cent of the UK’s current imports supplied by key competing countries, export gains could be transformative.
A 10 per cent shift from China’s exports alone would generate approximately $680 million in additional exports for India. Capturing a similar share of Bangladesh’s shipments could contribute another $480 million, while taking 10 per cent of imports currently supplied by Pakistan, Vietnam and Cambodia would collectively add another $430 million.
Combined, these gains amount to an estimated $1.6 billion in additional exports, potentially increasing India’s textile and apparel exports to Britain from the present $1.7 billion to well above $3.3 billion over the medium term, provided Indian manufacturers successfully secure this market share.
China, Bangladesh face India’s new competitive edge
Although China continues to dominate Britain’s textile imports through its vast manufacturing scale and integrated supply chains, it does not enjoy a free trade agreement with the UK. Chinese exports therefore continue to enter Britain under the UK’s standard MFN tariff regime, where textile products generally attract duties of around 8 per cent and apparel up to 12 per cent.
The India-UK FTA therefore creates India’s strongest tariff advantage in years, particularly across cotton garments, home textiles, natural fibre apparel and value-added textile products, where Indian manufacturers already possess significant production capabilities.
Bangladesh, meanwhile, has long benefited from duty-free access under the UK’s Developing Countries Trading Scheme (DCTS), enabling it to build a strong position in the British garment market. Before CETA, Indian exporters paid MFN duties while Bangladeshi products entered duty-free.
With CETA now eliminating this tariff gap, India gains equal duty-free access, removing one of Bangladesh’s biggest competitive advantages in the UK market. The agreement also improves India’s position against other major suppliers including Vietnam, Pakistan and Cambodia, all of which have been important sourcing destinations for British retailers.
Industry observers, however, note that tariff benefits alone will not determine future success. The focus now shifts towards manufacturing capacity, delivery timelines, compliance standards, quality assurance and continuous product innovation to convert the new opportunity into sustained export growth.
Government eyes larger global textile footprint
The biggest beneficiaries of the agreement are expected to be labour-intensive and value-added product categories where tariffs previously reduced India’s competitiveness. These include women’s cotton dresses, cotton shirts and blouses, knitted garments, cotton T-shirts, terry towels, bed linen, kitchen linen, mattresses, cushions and a wide range of home textile products.
Union Textiles Minister Giriraj Singh said the India-UK Free Trade Agreement would significantly enhance India’s textile and apparel exports by providing duty-free access to a major global market while strengthening India’s expanding network of trade agreements.
According to Singh, India presently has 10 Free Trade Agreements covering 19 countries. With the UK agreement now in force and negotiations with the European Union and New Zealand nearing completion, India’s FTA network is expected to expand to 56 countries in the coming years. He noted that the global textile import market is valued at nearly $900 billion, while India’s share currently stands at only 4 per cent.
Once the pending agreements, particularly with the EU, are concluded, the countries covered under India’s FTA network would together account for almost 60 per cent of the global textile import market, opening significant long-term export opportunities for Indian manufacturers.
Addressing concerns over tariff uncertainties in the United States, Singh said India has retained nearly 80 per cent competitiveness in that market. Textile exports to the US stood at around $10.9 billion before 2024. Although exports experienced some decline, the reduction remained far below initial fears. Against projected losses of up to $11 billion, the actual decline was limited to roughly $2 billion after the government identified 40 new international markets through Indian embassies.
The minister also highlighted that textile exports now originate from 548 districts across the country, reflecting broader participation from handicrafts, handlooms and garment-producing regions beyond traditional export hubs.
To further strengthen export capacity, the Ministry of Textiles is establishing six Export Facilitation Centres to assist new exporters with registration, documentation, Certificate of Origin procedures and FTA-related guidance.
Singh added that he would engage with State Chief Ministers to strengthen district-level export ecosystems, while all 11 Export Promotion Councils have been directed to conduct awareness programmes to help small and medium exporters fully utilise the opportunities created by India’s expanding network of free trade agreements.
