India-UK FTA set to boost New Delhi’s leather, textile, jewellery, sports industry sectors

The Free Trade Agreement (FTA) between India and the UK will boost New Delhi’s labour-intensive manufacturing sectors and is also set to relieve Indian workers of double social security contributions in London.

The FTA between India and the UK is believed to open up new avenues for skill development, employment, financial gains, and entrepreneurial opportunities across various sectors for Indian youth.

The duty-free access to the UK market will give India a competitive edge in labour-intensive sectors like leather/footwear, textile/clothing, gems & jewellery, and furniture/sports goods.

In key labour-intensive sectors, duty has been reduced to zero from previously high levels—12% on textiles and clothing—offering a major boost for Indian exporters.

The UK imports over USD 23 billion of these goods, indicating a strong potential for increased production and employment within India for young workers.

Leather/footwear industry

The Indian footwear industry located in Uttar Pradesh’s Agra may reap the benefits of the FTA. Besides, another UP city, Kanpur, known for its leather footwear with several large tanneries and factories may also see increase in its fortunes. Chennai, with good port connectivity, is also likely to witness a boost. The Delhi wholesale footwear market may also see a boom.

Several other cities like Mumbai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambut, Trichy, Dindigul, Erode, Kolkata, Jalandhar, Karnal, Ludhiana, Sonepat, Faridabad and Pune are also important in the footwear industry, each with its own strengths.

India is expected to gain at least 5% additional market share in the UK within one to two years. The FTA positions India to outperform competitors like Vietnam, Indonesia, Cambodia, Turkey and Bangladesh, particularly in the value-conscious UK retail and brand segment. Conservative estimates project that exports of leather goods and footwear from India to the UK could exceed USD 900 million, marking a substantial leap forward. In the longer run, India is well-positioned to become one of the top three suppliers to the UK in these sectors.

Textile industry

Several Indian cities are renowned for their textile industries. India’s ‘Textile City’ Surat renowned for synthetic fabrics, Ahmedabad known for its cotton textiles, Karur in Tamil Nadu, Pochampally in Telangana, famous for its Ikat silk and handloom fabrics, Chanderi in Madhya Pradesh, famous for its silk and cotton fabrics, are likely to benefit.

Besides Mumbai, a major centre for the cotton textile industry, cities including Varanasi (known for Banarasi silk saris), Kota (famous for Kota Doria fabric), and Tiruppur (known as the ‘Knitwear Capital of India’) is also going to witness the impact.

The zero duty market access for the textiles and clothing sector accounts for 1,143 tariff lines, contributing 11.7%. This reflects the rich variety of textile and apparel goods in trade and their traditional significance in both domestic manufacturing and export orientation.

India was facing duty disadvantage vis-à-vis Bangladesh, Pakistan and Combodia, which had duty-free access to the UK market. The FTA eliminates the tariff on textile imports from India, thereby enhancing our competitiveness. In textiles and clothing, while the UK’s total imports (USD 26.95 billion) are lower than India’s global exports (USD 36.71 billion), India still supplies only USD 1.79 billion to the UK. With the FTA promising duty-free access and removal of trade barriers, this sector is also well-positioned to increase its footprint. Overall, the data underscores a clear export potential gap that the FTA can help bridge, enhancing India’s presence in one of the world’s most lucrative import markets.

As the UK’s fourth-largest textile supplier, India, currently holding a 6.1% market share, is now empowered to aggressively close the gap with leading players like China and Bangladesh.

Gems/jewellery sector

India’s total gems and jewellery exports to the UK are valued at USD 941 million, with USD 400 million coming from jewellery. The FTA opens up a huge market as the UK imports approximately USD 3 billion worth of jewellery annually. Tariff relaxations under the FTA are projected to double India’s gems and jewellery exports to the UK within the next two to three years.

The trade boost will generate substantial employment opportunities in India’s design, manufacturing, and artisan sectors, and invigorate traditional craftsmanship, fostering inclusive economic growth in cities like Jaipur renowned for its historical connection to gemstone trading and cutting, especially emeralds and semi-precious stones. It has a major hub for both manufacturing and trading, with skilled artisans and vibrant markets like Johari Bazaar.

While known for diamonds, Mumbai also has a strong gemstone market, particularly in Zaveri Bazaar. Kolkata’s gemstone markets, like Burra Bazaar and Bowbazar, are known for a variety of gemstones and traditional Bengali jewellery, like intricate gold and silver filigree work. Hyderabad is famous for its pearls and gemstone jewellery, particularly Nizam-inspired designs, including Jadau and pearl jewellery.

Sports and furniture sectors

In sports products sector, the projected growth is 15% and the target for the next five years is USD 186.97 million. Exports of soccer balls, cricket gear, rugby balls, and non-electronic toys are set to increase. Indian sports goods and toys will benefit from the eliminated UK import duty, making them more price-competitive compared to those of countries like China or Vietnam, which do not have similar FTAs with the UK. It will promote compliance with the UK and EU standards, thereby increasing buyer confidence and mutual collaboration.

Jalandhar in Punjab and Meerut in Uttar Pradesh are the two most prominent cities in India known for the production of sports goods. These cities are major manufacturing hubs for a wide variety of sports equipment, including cricket bats, hockey sticks and balls.

Besides, India’s furniture hubs are also going to get a boost.

Jodhpur, the furniture capital of India, is known for its handcrafted wooden furniture with a vintage charm. Saharanpur is famous for high-quality wood furniture, particularly intricate carvings. Mumbai and Delhi are also major hubs, with markets like Chor Bazaar, Malad (Mumbai), and Kirti Nagar (Delhi) offering a wide variety of furniture options.

Indians working in UK

A crucial benefit for Indian workers temporarily in the UK (up to three years) and their employers is the exemption from paying social security contribution (which is currently around 20% of the salary) in the UK. This leads to significant financial gains for Indian service providers and enhances their competitiveness, making it more attractive for Indian youth to pursue short-term work assignments and gain international exposure.

The FTA eases mobility for Indian professionals, including contractual service suppliers, those working on specific projects for a UK client, independent professionals like yoga instructors, classical musicians, and Chef de Cuisine, who will find it easier to offer their services in the UK.

Business