India-UK FTA: Which Apparel Categories Will See a Boom? Exporters Weigh In

The proverb – the fruit of patience is sweet – fits perfectly with the India-UK Free Trade Agreement (FTA). After three-and-a-half years of intense back-and-forth, the deal is finally done. But the sweet part? That’s still a bit down the road. 

The 26-chapter FTA is now in the legal vetting stage, where both India and the UK will review the details. Following this, India’s Union Cabinet and the UK Parliament must formally approve it. 

This whole process could take up to 15 months, though both sides are keen to move faster. 

Still, the timing of the agreement carries weight. It was signed by the world’s fifth and sixth largest economies, India and the UK, at a time when global trade is facing several headwinds from reduced demand in major economies to ongoing geopolitical tensions and the US-China tariff war.

 The big question: How would this FTA help India’s apparel industry? 

The FTA gives India’s apparel exports a 9.6 per cent duty edge over China, which is currently the UK’s largest supplier of RMG, with a 25.6 per cent market share. Other key countries include Bangladesh (19.9 per cent), Turkey (7.9 per cent), India (6 per cent), Cambodia (5.5 per cent), Italy (5.2 per cent) and Vietnam (5.4 per cent).

 A report by CareEdge projects that India’s share in UK apparel imports could double from 6 per cent in 2024 to 12 per cent, unlocking an additional export opportunity of US $ 1.1 – 1.2 billion annually in the near to medium term.

 Right now, India exports around US $ 1.2 billion worth of garments to the UK, out of its total RMG exports of US $ 16 billion. The UK is amongst the top five RMG markets, importing around US $ 20 billion in 2024.

FTA SPARKS EXPORT OPTIMISM 

An analysis of the UK’s top retailers and their supplier base (check graph) shows that China has consistently been the top supplier for all major UK retailers, including ASOS, M&S, Primark, Next and Boohoo, with a significant gap between China and other competitors. However, with the ‘China Plus One strategy’ gaining momentum and the removal of tariffs under the new trade deal, India is now in a stronger position to claim a larger share of these retailers’ sourcing pie. 

In fact, for some retailers like John Lewis & Partners, Missguided and The Very Group, India already ranks as the second-largest sourcing destination. No wonder, manufacturers working closely with UK retailers are optimistic about the FTA’s potential.

“We produce ladies’ and men’s woven articles like shirts, tops and bottoms— these categories will benefit. In UK, knits are a very big category, especially fashion items like ladies’ dresses,” said Deepak Vazirani, CMO, Creative Garments Pvt. Ltd., which has a production capacity of 1.2 million pieces a month. Its UK clients include Sainsbury’s, Matalan and Next. 

Similarly, Sanjeev Gupta, Proprietor, Lords Creation, a supplier to Next, Debenhams and TK Maxx with an annual production capacity of 900,000 pieces, added, “We expect higher volumes across all categories—wovens, knits, menswear, womenswear and kidswear. Our women’s outerwear business in both knits and wovens is already seeing strong interest, as UK buyers increasingly prefer volume over margins.”

Providing deeper insights into shifting sourcing dynamics, Prabhas Kashyap, VP, MAF Clothing Pvt. Ltd., which has an annual production capacity of 14 million pieces each of knits and wovens, mentioned, “Primark, one of our key clients, has initiated enquiries about pricing, product variety and potential orders, showing clear intent.”

US $ 1B

India exports around US $ 1.2 billion worth of garments to the UK, out of its total RMG exports of US $ 16 billion. The UK is amongst the top five RMG markets, importing around US $ 20 billion in 2024.

He explained, “Primark currently sources only tops, menswear and kidswear from India, categories lighter on SAM (Standard Allowed Minutes) and CM (Cut & Make). Interestingly, enquiries for bottoms have also started coming in. Also, Primark is expanding in the US and wants to reduce reliance on ‘Made in China’ goods. Currently, Primark’s global sourcing from India stands at around 6 per cent, but they’ve indicated this could rise to 10-12 per cent within the next 1-2 years.

Prabhas highlighted that in some categories like cotton T-shirts, singlets, vests (knitted) and women’s cotton trousers and shorts, India is already price-competitive against Bangladesh, thanks to strong fabric sourcing. With the duty benefits under the FTA, competitiveness will improve. 

He also identified an opportunity in the jackets category, noting that, “We also work with Next, and since they primarily source jackets from China, it opens the door for Indian manufacturers to tap into the lighter jacket segment.”

Rajeev Gupta, JMD, RSWM Ltd

Adding to this, Rajeev Gupta, JMD, RSWM Ltd., the flagship company of LNJ Bhilwara Group, one of the leading manufacturers and exporters of yarn, denim and knitted fabric in India, said, “The categories that stand to benefit the most include trousers, T-shirts, jerseys, dresses, shirts, babywear, underpants and nightdresses. These are segments where India possesses strong manufacturing competitiveness and where the UK imports substantial volumes. For example, trousers alone comprise 20 per cent of UK apparel imports, T-shirts and dresses together account for 21 per cent and jerseys contribute 15 per cent.” 

Rajeev added that RSWM works with several UK brands but declined to name them, citing confidentiality agreements.

Likewise, Shubh Sahni, Director, Windeson Trademart Pvt. Ltd., which manufactures 6 million units annually for UK retailers such as River Island, Next and Boohoo Group, as well as other clients, emphasised growth potential across menswear, womenswear and kidswear.

“That said, competition will remain from neighbouring industries,” he noted. Bangladesh, for instance, benefits from the UK’s Developing Countries Trading Scheme (DCTS), which gives it duty-free access until 2029 and beyond, for most of its exports. Vietnam has also seen strong gains from its own FTA with the UK since 2021.

Ankit Jaipuria, Co-founder, ZYOD

Ankit Jaipuria, Co-founder, ZYOD (a tech-enabled B2B apparel manufacturer which serves clients such as Next and Boohoo) said premium and sustainable apparel categories would benefit the most from the FTA. According to a 2024 report by IMARC, the UK sustainable fashion market is valued at US $ 261.04 million and is projected to reach US $ 1,757.42 million by 2033, reflecting a strong upward trajectory. 

“This growth trend directly aligns with ZYOD’s product strengths, particularly in organic cotton and sustainable fabrics, where India has a well-established supply chain and production capability. We foresee strong potential in high-end, elegant, ready-to-wear garments,” he said. 

On the question of margins, Mayank Gupta, Director, Pearl Apparels, which supplies kidswear and womenswear including dresses, jumpsuits and dungarees to retailers such as Sainsbury’s and Next, offered a realistic perspective. “Margins may remain largely unchanged, but we do expect a rise in volumes. The UK retailers would likely retain the benefit themselves.”

Meanwhile, trade bodies also echoed this optimism.

KM Subramanian, Chairman, KM Knitwear and President, TEA

For instance, KM Subramanian, Chairman, KM Knitwear and President, Tirupur Exporters’ Association (TEA), believes that post-FTA implementation, UK exports from Tirupur could double within a year. His company is also one of Primark’s biggest Indian suppliers.

Tirupur, one of India’s leading apparel hubs, makes about Rs. 40,000 crore (US $ 4.69 billion) every year, with 10 per cent of that already coming from the UK.

“From infants to men’s and womenswear, Tirupur caters to all categories. Big brands like Primark, Tesco and M&S source extensively from here and the entire knitwear chain stands to gain,” said KM Subramanian.

Mithileshwar Thakur, SG, AEPC

Whereas, Mithileshwar Thakur, SG, AEPC (Apparel Export Promotion Council), said “The FTA opens doors to scale up exports in underpenetrated but high-potential categories like trousers, jerseys/pullovers etc.”

INDIA’S RACE TO FIX GAPS AT HOME 

Experts stressed that the India-UK FTA alone won’t be enough to capture a big chunk of the UK market, there’s still important work to be done at home. 

Building additional manufacturing capacity is a top priority, emphasised KM Subramanian. He added, “We’re already operating at nearly 90 per cent capacity in Tirupur. If more orders come in, fulfilling them will be challenging unless we scale up on a war footing.” He also highlighted the need to tackle growing labour shortages.

Another manufacturer lamented that there’s already a serious shortage of raw material in the industry. Forget MMF, even cotton is hard to get. Most mills are fully booked for the next 90 to 120 days. India has long lacked sufficient MMF capacity, and while efforts are underway, no major projects have taken off yet. Cotton is also under pressure due to rising domestic demand driven by a shift toward cotton-rich fabrics. 

Whereas, Rajeev argued that while there is high potential to take market share from China due to buyer diversification trends, replacing Bangladesh, Turkey or Vietnam is expected to be limited, even in best-case scenarios, as these nations have deeply rooted competitiveness in key categories.

Moreover, the UK’s emphasis on sustainable and ethical sourcing practices adds another layer of competitiveness where India must improve to keep pace. “Strategic investments in technology, innovation and supply chain efficiency will be key for Indian apparel exporters to not just match but surpass competitors in the UK market,” added Mithileshwar Thakur. 

With over a year before the FTA goes fully into effect, experts believe India still has time to scale capacity and improve efficiencies to truly benefit from this opportunity.

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