India-UK FTA Unlocks $1.2 Billion Export Opportunity for Indian Garments: Report The new terms give Indian apparel exporters a 12 per cent advantage over China, the largest supplier to the UK, which has seen its share erode in recent years due to rising labor costs and global brands shifting to a "China Plus One" sourcing model.
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India currently holds just a 6 per cent share in the UK's $20 billion readymade garments (RMG) market, lagging behind countries like Bangladesh, Turkey, Vietnam, and Italy, which have long benefited from duty-free access. Previous trade advantages gave India's competitors a 12 per cent pricing edge, until now. With the recently concluded India-UK Free Trade Agreement (FTA) in place, Indian exporters will gain duty-free access on 99 per cent of tariff lines in the UK, dramatically narrowing the gap.
India's readymade garments (RMG) sector is poised for a transformative shift, thanks to the FTA, a deal that industry experts are calling a "game changer." According to a report by CareEdge Ratings, the global textile and RMG trade reached an estimated $900 billion in calendar year 2024 (CY24), with readymade garments alone contributing $525 billion. Major importing markets—the EU, USA, UK, Japan, Canada, and South Korea—collectively represented 44 per cent of global RMG imports. Amid this competitive landscape, India is making a strong push to reclaim ground in the UK, one of the world's most lucrative apparel markets.
The deal has immediate implications. Rajeev Singh, director general of the Indian Chamber of Commerce, noted, "We appreciate the successful conclusion of the India-UK FTA, which would help to double the current bilateral trade from $60 billion in the next 5 years. Under the deal India would get duty free access on 99 per cent of tariff lines and will get substantial benefits in sectors like chemicals, textiles and clothing, leather & footwear, gems & jewellery and base metals."
The new terms give Indian apparel exporters a 12 per cent advantage over China, the largest supplier to the UK, which has seen its share erode in recent years due to rising labor costs and global brands shifting to a "China Plus One" sourcing model. At the same time, political and logistical volatility in Bangladesh (currently holding a commanding 19 per cent share) may prompt brands to diversify their sourcing base, with India standing out as a strong alternative.
The report projects that India could double its share in the UK's RMG market from 6 per cent to 12 per cent in the near to medium term. This shift could unlock an incremental annual export opportunity worth $1.1 to $1.2 billion, driven by improved competitiveness post-duty removal and the easing of macroeconomic headwinds in the UK, such as inflation and high interest rates.
Supporting this optimistic outlook is India's robust policy environment. Initiatives like the PM Mega Integrated Textile Region and Apparel (PM MITRA) parks and the Production Linked Incentive (PLI) scheme are expected to further strengthen the country's textile backbone.
Rajeev Gupta, joint managing director of RSWM Ltd, underscored the far-reaching impact of the FTA, stating, "The India-UK FTA is expected to significantly enhance our apparel exports to the UK by eliminating tariff barriers, thus improving our price competitiveness. This will likely lead to both increased volumes and improved margins."
According to Gupta, the deal paves the way for deeper collaborations between Indian manufacturers and UK-based brands, potentially sparking joint investments and broader trade partnerships. "The UK's growing intent to diversify its sourcing beyond countries like China and Bangladesh strengthens the opportunity for volume expansion," he said.
In terms of specific product segments, the upside is significant. Trousers, t-shirts, dresses, jerseys, shirts, baby wear, underpants, and nightdresses are some of the categories where India can now compete more aggressively. Gupta noted that the FTA opens the door for Indian suppliers to gain share in these high-demand categories, where India's manufacturing strength and now, tariff parity, make a compelling case.
However, Gupta also cautioned that the road ahead is not without challenges. "Indian apparel exports will continue to face stiff competition from countries like China and Bangladesh, even after the FTA," he said, citing their deeply entrenched supply chains and long-standing buyer relationships. He emphasized that tariff advantages alone won't be enough; India will also need to meet expectations on sustainability, design innovation, and supply chain ethics to remain competitive. "While the FTA will level the playing field on tariffs, success will depend on India's ability to align with global standards, ensure faster turnaround times, and enhance product innovation."
With the elimination of a long-standing tariff disadvantage, the door is now open for Indian RMG exporters to scale their presence in one of the world's most demanding markets.
