The India-UK Free Trade Agreement (FTA) is expected to significantly strengthen India’s apparel exports by eliminating a long-standing tariff disadvantage against competing manufacturing hubs such as Bangladesh and Cambodia. Industry leaders believe the agreement will not only improve India’s price competitiveness but also encourage fresh investments, boost exports and create new employment opportunities.
Speaking to ET Now, Pallab Banerjee, MD, Pearl Global said the agreement comes at a crucial time for the country’s textile and garment sector, which has historically faced higher import duties in the UK despite being a major supplier.
Tariff Disadvantage Finally Removed
Banerjee said India has traditionally exported apparel worth around $1 billion to $1.5 billion annually to the UK. However, Indian products attracted import duties of 10-12%, while exports from Bangladesh and Cambodia entered the UK duty-free due to their Least Developed Country (LDC) status.
“India has been exporting about $1 billion to $1.5 billion worth of apparel to the UK, but our products attracted a 10-12% tariff, while Bangladesh and Cambodia enjoyed duty-free access. That was a major disadvantage for India.”
He noted that Vietnam also benefited from preferential trade arrangements, leaving India at a competitive disadvantage for several years.
According to Banerjee, UK and European retailers have already begun showing greater interest in sourcing from India as trade agreements progress.
“We are already seeing huge interest from retailers in the UK as well as the European Union. That interest is translating into increased business for India.”
Better Pricing to Improve Competitiveness
The removal of tariffs is expected to substantially improve India’s competitiveness in global apparel sourcing.
Explaining the pricing dynamics, Banerjee said that even when manufacturers from India, Bangladesh and Cambodia quoted identical factory prices, Indian products landed in the UK roughly 10% more expensive because of import duties.
“If all three countries quoted the same price, India landed about 10% more expensive. That disadvantage is now going away.”
He believes India can now compete on equal terms while offering buyers additional advantages such as supply-chain diversification and political stability.
“India now stands on a much more equitable footing. Retailers can diversify their sourcing, and we become competitive without the earlier handicap.”
Scope Beyond Fashionwear
Banerjee expects the agreement to benefit not only India’s traditional fashion and embroidered garment exports but also core apparel categories where the country has so far remained underrepresented.
He pointed out that India has been exporting children’s garments from the Tiruppur cluster and various fashion products, but has largely missed out on high-volume wardrobe basics that dominate global apparel trade.
“India has been strong in fashion products, embroidery and handwork, but we have largely missed out on core basic garments. This agreement creates an opportunity to build infrastructure and become a stronger supplier in these categories as well.”
He added that ongoing trade negotiations with the European Union and the United States could further expand India’s export opportunities across apparel segments.
Fresh Investment Likely
Banerjee believes improved profitability will encourage manufacturers to increase capital expenditure within India rather than expanding production in competing countries.
“Earlier, investment decisions favoured Bangladesh or Vietnam because they were more profitable. With this disadvantage removed, India becomes a much more attractive destination for fresh investments.”
He added that the textile and apparel industry is labour-intensive, making the FTA particularly important from an employment perspective.
“This will be a major boost for India. The sector creates a huge amount of employment, so the overall impact should be very positive.”
Pearl Global Sees UK Opportunity
For Pearl Global, the agreement opens the door to increase supplies from its Indian manufacturing base.
Banerjee said the company already has deep relationships with leading UK retailers, many of whom have historically sourced products from its Bangladesh and Vietnam facilities. Those customers are now evaluating India more seriously because of the improved cost competitiveness.
“Retailers we have traditionally serviced from Bangladesh and Vietnam are now looking at India because the 10% disadvantage has disappeared.”
He added that the UK is already becoming a larger contributor to the company’s export basket.
“We are already seeing growth in the UK’s share of our business, and I believe other Indian exporters will experience similar benefits.”
