17-05-2025
India-UK trade deal set to boost India's fashion export market
Chairman of the export promotion committee of India's Apparel Export Promotion Council (AEPC) and managing director of export company Kaytee Corporation Pvt Ltd Premal Udani is 'highly enthused' by the India/UK free trade agreement (FTA).
He told Just Style: 'The FTA neutralises a 10% duty, thus giving India a level playing field with some of our neighbouring countries. We expect a minimum 30% increase in exports of apparel within the first year after the FTA is operationalised.'
Chief mentor and past president of the Clothing Manufacturers Association of India (CMAI) Rahul Mehta, agrees adding: 'Considering that product categories such as t-shirts, trousers, dresses, shirts and blouses – all in which India has a significant strength in manufacturing - occupy a major share in the import basket of the UK, the FTA certainly provides us with an opportunity to increase our exports. It has also come at a right time, when our major competitor Bangladesh is going through political turmoil.'
Branding the FTA "a game changer", N Thirukkumaran, general secretary of Tiruppur Exporters' Association told Just Style: 'India's textile exports to the UK, currently estimated at $1.3bn annually, is poised to increase very significantly (at least double in one to two years) once the FTA comes into effect.' This might take a year, as ratification and formalisation procedures are completed.
The India-UK FTA also comes when international buyers are comparing potential so-called 'reciprocal' tariff rates (based on trade deficit data rather than actual protection) threatened by the US from 8 July. The Trump administration's proposed tariff (37%) on Bangladesh is substantially higher than what is proposed for India (26%).
The US imported $79.3bn's worth of apparel in 2023, accounting for about one-fifth of global imports. Bangladesh was the largest US supplier by value, supplying 9% of US apparel imports ($7.1bn), followed by India ($4.6bn, or 5.8%), according to APEC.
India wants to leverage this strength throughout the value chain, from fibre to fashion, in ongoing bilateral trade talks with the US: 'We expect that a India-US bilateral trade agreement should be in place by June end,' predicted Mr Udani. "We expect that the Indian apparel industry will be a major beneficiary of such an FTA.'
One benefit from the Trump administration's perspective is that India's substantial appetite to buy US products, from cotton to agriculture to oil to defence equipment, and the fact that India's traditional exports such as clothing do not compete with many American manufacturers are facilitating factors, he said.
India's domestic textile and fashion market is also substantial - growing at a compound annual growth rate (CAGR) of 14.59% from $172.3bn sales in 2022 and expected to reach $387.3bn by 2028, said the India Brand Equity Foundation.
There are however challenges in India. 'Our capacities are not enough, our scale is inadequate, and our supply chain timelines are not geared. We also do not have the ease of access to appropriate raw materials, especially of MMF [man-made fibre] fabrics which Bangladesh enjoys,' said Mehta.
To this end, the Indian government, the garment industry and the AEPC are working in tandem to expand production capacity, train additional personnel and diversify India's fabric base, said Udani. In the short run, large capacity exporters may gain from Bangladesh's losses because they can deliver the quantities needed by major buyers, but medium and small players will also benefit from the FTAs that India is pursuing, which also includes talks with the European Union (EU), said Thirukkumaran. Higher visibility of Indian exporters at major US trade shows, such as Apparel Sourcing New York, MAGIC Las Vegas, and Texworld USA, is also attracting buyers.
With the anticipated increase in India's production of MMF fabrics, technical fabrics and performance fabric, Indian apparel manufacturers are likely to expand their production base from traditional cotton products, said Thirukkumaran.
India's increasing emphasis on environment, social and governance (EGS) practices is a major attraction for the global brands catering to the increasingly conscious clientele, to look to India as a sourcing hub, said Thirukkumaran. Tiruppur, in Tamil Nadu, for instance, is rapidly emerging as a global leader in ESG practices. The textile and knitwear hub generates 1,950MW of renewal energy and treats 130m litres of wastewater per day through advanced zero liquid discharge systems achieving 90% water reuse, according to the Tiruppur Exporters' Association general secretary.
Earlier this month (May), the UK fashion and textile sector welcomed the 'landmark trade agreement' with India but said caution must be exercised to maintain a level playing field.
"India-UK trade deal set to boost India's fashion export market" was originally created and published by Just Style, a GlobalData owned brand.
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