Can the UK FTA alleviate US-tariff pain for textiles?

The US tariffs will bite India's textile sector-exports to the US stand at $10.7 billion annually, and some estimates project a 40% decline, as exports become more expensive. Given this, India's textile sector badly needs new markets. The imperative for this is spelled out by the fact that the sector contributes 2.3% to the GDP, accounts for 13% of industrial production, and comprises 12% of the country's total exports. Employing over 45 million, many of them rural women, it is second only to agriculture in terms of livelihoods. Against this backdrop, can the Comprehensive Economic and Trade Agreement (CETA), signed by India and the UK in July and expected to be implemented in early 2026, offset some of the hurt? Under CETA, the UK will eliminate tariffs on several labourintensive Indian exports, leading to significant market access gains.

- Renjith Ramachandran Amarendu Nandy

Despite facing a 9% import duty in the UK so far, India managed to secure a 6% share in its readymade garment imports, exporting goods worth approximately $1.2 billion annually. With the elimination of tariffs, shipments to the UK are projected to increase by 30-40%.

However, zero-duty access alone will not automatically guarantee an increase in exports. The IndiaJapan Comprehensive Economic Partnership Agreement (CEPA) is a case in point. Despite similar concessions, Indian textiles struggled to find a footing in Japan's highly structured and quality-conscious market. In the UK too, India is seeking to expand in a playing field dominated by China, Bangladesh, and Vietnam - countries with well-entrenched supplier relationships, agile production cycles, and cost structures that are difficult to match. Several of them also enjoy zero-duty access, which could effectively neutralise India's advantage under CETA. Therefore, the challenge lies in whether Indian textile exporters can match or outperform such global competitors in speed, quality, and reliability.