The proposed Free Trade Agreement between India and the United Kingdom is expected to create a major opportunity for the Indian textile industry. Analysts at India Ratings and Research estimate that the deal could unlock nearly $1 billion in additional exports by removing the 12% tariff currently applied to Indian textile products. This will make Indian goods more competitive in the UK market, which is India’s third largest destination for textile exports.
In 2025, India exported textiles and apparel worth $1.95 billion to the UK. Apparel accounted for 67% of shipments, while home textiles contributed $290 million and fabrics added $110 million. The removal of tariff disadvantages is expected to help Indian exporters gain market share from Chinese suppliers. However, competition from Bangladesh remains strong because of lower production costs and larger manufacturing scale.
Experts believe large integrated textile companies are better positioned to benefit due to their scale, customer relationships and stronger financial resources. Smaller firms may struggle if expansion is funded through heavy debt, which could affect liquidity.
India’s share of the UK textile import market is currently 6.9%, leaving significant room for growth. Even a 3% increase could translate into nearly $900 million in incremental exports. To sustain gains, exporters must meet evolving compliance requirements including ethical sourcing, ESG reporting and traceability standards. Larger firms are better equipped, while smaller players may face higher costs.