FTA With UK Promises Big Gains for Indian MSMEs in Garments, Leather and Footwear Exports

The textiles sector stands at the heart of this [possible] trade transformation, with elimination of UK tariffs of 8-16% on textile products creating an instant price advantage for Indian manufacturers. Made-ups, encompassing home textiles like bed linen and towels, are forecast to climb from $276 million to $477 million, reflecting the sector's growth potential. Key manufacturing hubs like Tiruppur, Surat and Ludhiana expect export momentum, and established players like Welspun India, Arvind Ltd, Raymond and Vardhman should benefit most.

UK buyers have reportedly responded with increased interest. One should sooner or later start seeing a surge in sourcing inquiries and developing preferences for Indian suppliers who will now need to combine quality, reliability and adherence to strong labour laws.

Some analysts believe this breakthrough FTA reflects India's growing reputation as a politically stable and transparent trade partner, enhanced by the agreement's streamlined administrative framework. The shift in the narrative is particularly striking as it directly challenges the market dominance of countries that previously enjoyed preferential access to British consumers.

The Confederation of Indian Textile Industry noted that the duty advantage will help Indian textiles compete more effectively against countries that already have FTAs with the UK. The deal encompasses traditional segments like ready-made garments, home textiles, carpets and handicrafts, besides opening new avenues in technical textiles where India's manufacturing capabilities meet evolving consumer demands—though much will depend on execution.

Indian manufacturers will need to invest in advanced machinery, innovation and digital systems to cater to increasingly sophisticated British consumer preferences. The FTA is expected to foster greater innovation, technology transfer and collaboration between Indian and UK businesses, leading to improved product quality and design capabilities. Stakeholders feel Indian textile exports to the UK could more than double within three years, with potential for exponential growth supported by regulatory convergence and collaborative initiatives under the FTA framework.

Seams of Change: Indian Apparel Meets UK Opportunity

India's apparel sector appears to be the standout beneficiary—on paper, at least—with export projections pointing to sharp growth. Woven apparel exports are projected to surge from $753 million to $1.6 billion by 2027, and knitted apparel exports from $654 million to $1.13 billion. This phenomenal growth comes from achieving long-sought parity with global competitors through duty-free access to British markets, finally removing the 10–12% tariff disadvantage that had constrained the sector’s growth till now.

The sector's market positioning should come from impressive domestic value addition, with nearly 90% of raw materials sourced locally. This intrinsic strength enhances export competitiveness while delivering “sustainability” benefits that resonate with environment-conscious UK consumers. Companies like Shahi Exports—the country's largest garment exporter—are already seeing inquiries and long-term sourcing commitments from British buyers, news reports indicate.

UK retailers are expected to revisit their sourcing strategies, reevaluating existing supplier relationships with manufacturers in other countries in favour of Indian suppliers. This strategic pivot could reflect broader global realignment as Western brands diversify away from traditional manufacturing hubs like China, positioning India as a large-scale alternative for apparel production. The Indian government's production-linked incentive schemes are already driving investment in machinery, sustainability measures and compliance systems that meet international standards.

The Apparel Export Promotion Council and Confederation of Indian Textile Industry have lauded the agreement's potential to create new jobs and attract further investment in manufacturing capabilities. Beyond traditional clothing exports, the FTA opens promising avenues in technical and performance apparel, high-value fashion and bespoke tailoring—segments where India can add substantial value through skilled craftsmanship and innovative design. UK consumers anticipate accessing a wider variety of affordable, high-quality garments, whilst Indian exporters prepare for enhanced brand visibility in premium British retail outlets through improved market access.

The leather sector is well positioned to benefit from the 16% tariff elimination. The removal of the punitive 16% tariff on leather goods creates immediate price competitiveness, with the Council for Leather Exports hoping to capture an additional 5% market share in the UK within 1–2 years. Industry projections suggest exports could exceed $900 million, marking the sector's most substantial leap in the UK market in decades.

Traditional leather manufacturing centres of Agra, Kanpur, Kolhapur and Chennai will be the primary beneficiaries. India's position as the second-largest producer and consumer of leather footwear globally, and a leading exporter of leather garments and goods, provides a solid foundation for this expansion. The agreement's robust protection for geographical indications ensures that artisanal products like Kolhapuri chappals enjoy clear branding and premium positioning in British markets.

The agreement simplifies longstanding certification complexities and regulatory divergences that had created barriers for Indian exporters. Large corporations like Bata India and Relaxo now operate on equal terms with international competitors, while small and medium enterprises should gain quicker access to retail networks in the UK. The Council for Leather Exports has specifically highlighted how scrapping the 16% tariff will make Indian footwear and leather accessories more affordable and attractive to UK consumers.

The employment impact could be substantial, since the leather sector is among India's most export-oriented industries. Family-run artisanal clusters are expected to boost formal employment, raise incomes in traditional manufacturing areas and foster skills transfer across generations. Indian exporters will now have to leverage digital transformation to invest substantially in traceability, sustainability and certification systems that meet international environmental and ethical standards, positioning themselves as responsible suppliers in the global value chain.

Footwear: Stepping Into Premium Markets

The elimination of tariffs on Indian footwear should create strategic opportunities for manufacturers spanning both industrial giants and specialised craft clusters. Footwear exports are projected to increase significantly from $279 million to $545 million, nearly doubling market presence in the UK and positioning Indian manufacturers for sustained growth. Companies like Bata India and Relaxo stand to benefit directly from zero-duty access to the UK, historically dominated by imports from countries enjoying superior tariff arrangements.

The removal of tariffs previously reaching 16% markedly boosts export competitiveness, particularly significant given the UK’s status as one of the world's largest footwear importers. India, despite being the world's second-largest producer, has underperformed in UK markets due to tariff disadvantages. The new duty-free regime could trigger increased orders—especially for value-fashion and premium leather footwear—incentivising long-term supply contracts with British retail chains.

Footwear artisans producing GI-tagged products will benefit from enhanced protection and branding support, facilitating entry into the UK’s premium segments where traditional craftsmanship commands premium pricing. Family-owned and women-led businesses active in specialised manufacturing across the state of Maharashtra and South India could see significant expansion of income and visibility given the UK's status as a high-value marketplace that appreciates artisanal quality.

The FTA's emphasis on specialised and craft-driven sectors is expected to generate substantial employment prospects, with thousands of new jobs projected across manufacturing, quality assurance, international marketing and export logistics. Sustainability and regulatory compliance are now essential for continued market access in the UK. This should encourage Indian footwear manufacturers to invest in environment-friendly processes, ethical sourcing, and innovative design capabilities that meet evolving consumer expectations in the UK.

The excitement surrounding the CETA is palpable. R Dinesh, Chairman of TVS Supply Chain Solutions, commented: "It will help streamline trade flows, reduce operational friction, and accelerate our ability to deliver cost-effective, agile solutions to global customers. With our strong presence in the UK and India, the agreement further strengthens our position in a critical market whilst opening new doors for cross-border collaboration, investment, and innovation."

Arun Poddar, CEO at Choice International Ltd, emphasised the potential: "The historic free trade agreement signed between the UK and India will significantly improve market access for Indian companies and will boost bilateral trade by around $34 billion annually. This agreement will pave the way for duty-free access to 99% of Indian exports, particularly from labour-intensive sectors like textiles, marine products, leather, footwear, engineering goods, auto components, engines, and chemicals. Overall, this development will have a very positive impact on the country's economy and could provide a major boost to the manufacturing sector, especially to the MSME sector."

Market analysts are equally bullish about prospects across these sectors. Kranti Bathini of WealthMills Securities stated: "Textile, leather...are the sectors most likely to benefit." Vivek Tandon of Revalyu Group, specialising in recycled PET yarn and textiles, observed: "India‑UK textile exports could double over five to six years at an 11% CAGR."

Industry associations are upbeat. Association representatives called the FTA: "A historic, much-awaited step that will catalyse Indian apparel and textile trade with the UK, putting our exporters on an equal footing with global peers." Industry sources noted: "Footwear exporters are particularly enthused as the UK FTA removes almost all tariff-related cost disadvantages overnight."

The actual realisation of these benefits hinges critically on the specific Rules of Origin outlined in the FTA, which determine whether products qualify as "originating" from India to be eligible for preferential tariffs. The full legal text detailing these crucial specifications remains under finalisation, creating some uncertainty for exporters planning investment decisions and market strategies.

In the UK, the UK Fashion & Textile Association has "broadly welcomed" the deal, viewing it as offering a "competitive edge" for domestic exporters to India. However, the UK Department for Business and Trade anticipates a slight decline in the Gross Value Added of its textiles, apparel, and leather sector by £114 million due to increased competition from Indian imports, highlighting the agreement’s role in opening up meaningful export opportunities for Indian manufacturers.