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Key Points

The US government's new 50% tariff on Indian goods has hurt competitiveness in that key market. Fortunately, the India-UK free trade agreement is expected to boost exports to the United Kingdom and offset these losses. Ongoing FTA negotiations with the European Union could provide additional support in coming years. While near-term risks exist from the US tariff hike, strategic trade agreements help balance the impact.

Key Points: India Textile Exports to UK Offset US Tariff Losses via FTA

  • US imposed 50% tariff on Indian goods from August 27
  • India-UK FTA creates level-playing field in UK's $23B market
  • Some export orders shifting to Vietnam and Bangladesh
  • Full impact of US tariffs expected in CY26 not immediately
2 min read

Textile export decline due to US tariffs likely to be compensated by increase in exports to UK: Report

US 50% tariffs hurt Indian textile exports, but India-UK FTA expected to compensate losses by boosting shipments to UK market, says CareEdge report.

"The expected decline in exports is likely to be compensated by increase in exports to UK aided by India-UK FTA - CareEdge Ratings"

New Delhi,, September 2

Indian textile losses due to the US tariffs are expected to be partly offset by export growth to the United Kingdom, supported by the India-UK free trade agreement (FTA), according to a report by Care Edge Ratings.

The exports are under pressure following the US government's decision to impose a 50 per cent tariff on Indian goods, effective from August 27, hurting the competitiveness of Indian exporters in the American market.

It stated "The expected decline in exports is likely to be compensated by increase in exports to UK aided by India-UK FTA, and ongoing FTA negotiations with the EU".

With the higher tariffs in place, some export orders are expected to shift towards competing countries such as Vietnam, Bangladesh, Pakistan, and China.

However, the report noted that textile exports from India may not see a sharp fall in CY25, as several US buyers have already advanced their shipments ahead of the tariff hike deadline.

The more significant decline in shipments to the US is expected to be seen in CY26, when the full impact of the tariffs will be felt.

The report highlighted that India's textile and apparel exports, valued at USD 35 billion in CY24, are significantly dependent on the US market, which contributes about 28-29 per cent of the overall shipments.

The India-UK FTA is expected to provide a major boost to India's ready-made garments (RMG) and home textiles sectors by creating a level-playing field against other competing nations in the UK's textile and apparel import market, which is estimated at nearly USD 23 billion.

In addition, ongoing FTA negotiations with the European Union are also expected to aid Indian textile exports in the coming years.

The report highlighted that India's textile and apparel industry stands at around USD 160-170 billion in size, with the domestic market accounting for 78-80 per cent of this share.

Of the USD 35 billion in exports recorded in CY24, RMG and home textiles accounted for the majority share of about 63 per cent. The United States continues to remain the largest export destination for India, with textile and apparel shipments worth nearly USD 10.5 billion in CY24.

The report concluded that while India faces near-term risks from the US tariff hike, strategic trade agreements with the UK and the EU could help balance the impact and support long-term growth of the textile sector.

- ANI

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Reader Comments

P
Priya S
The US tariffs are definitely concerning, but I'm glad our exporters were smart enough to advance shipments. Hope the UK FTA gets implemented quickly - our weavers and textile workers need this support!
M
Michael C
As someone in the textile business, I can confirm that the UK market has huge potential. Their demand for Indian cotton and traditional fabrics is growing. The FTA will help us compete with Bangladesh on equal footing.
S
Shreya B
While diversification is good, we shouldn't ignore that $10.5 billion US market completely. Our government should continue diplomatic efforts to resolve the tariff issue. Losing such a big market to Vietnam and Bangladesh would be painful 😔
A
Aman W
The domestic market is 80% of our textile industry! Instead of worrying too much about exports, we should focus on making quality products for Indian consumers too. Make in India for Indians first 👌
N
Nisha Z
Hope the EU FTA negotiations conclude soon. European markets have higher value customers who appreciate our craftsmanship and are willing to pay premium prices. This could actually improve our profit margins!

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