Duty-free access to UK market to boost labour-intensive industries
The Free Trade Agreement (FTA) with the UK is set to boost India’s labour-intensive manufacturing sectors by opening up new avenues for skill development, employment, financial gains and entrepreneurial opportunities.
The duty-free access to the UK market will give India a competitive edge in sectors like footwear, textile, jewellery and sports goods. For instance, reduction of duties on textiles from 12 percent to zero percent will be a major boost for Indian exporters.
The UK imports over $23 billion of these goods, which indicates a strong potential for increased production and employment for young workers in India.
Agra, which dominates the Indian footwear industry, may reap the FTA benefits. Delhi’s wholesale footwear market; and footwear businesses in Mumbai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambut, Trichy, Dindigul, Erode, Kolkata, Jalandhar, Karnal, Ludhiana, Sonepat, Faridabad and Pune are all likely to be benefitted by the agreement.
Besides, Kanpur with several large tanneries and factories may see an increase in its fortunes, while Chennai with good port connectivity for international buyers is also likely to witness a boost.
India is also expected to gain at least five percent additional market share in the UK in the next two years. The FTA with the UK will also help India in outperforming competitors like Vietnam, Indonesia, Cambodia, Turkey and Bangladesh in the UK’s retail and brand segment.
Conservative estimates project exports of leather goods and footwear from India to the UK could exceed $900 million. In the longer run, India is well-positioned to become one of the top three suppliers to the UK in these sectors.
Textile City of Surat, which is renowned for synthetic fabrics, Manchester of India – Ahmedabad, which is 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 also likely to be benefited.
Besides, Mumbai’s cotton textile industry, Banarasi silk sarees, Kota Doria fabric and Tiruppur, which is known as Knitwear Capital of India, is also going to witness the impact of the pact.
As the UK’s fourth-largest textile supplier, India supplies textiles worth $1.79 billion and holds a 6.1 percent of the UK’s market share. With the FTA promising duty-free access and removal of trade barriers, India is now empowered to aggressively close the gap with leading players like China and Bangladesh.
Jewellery sector could be another benefactor of the trade pact.
India’s gems and jewellery exports to the UK are valued at $941 million, with $400 million from jewellery alone. Tariff relaxations are projected to double India’s gems and jewellery exports to the UK in the next two to three years.
The pact is expected to be a boon for the skilled artisans of Jaipur’s Johari Bazaar; Mumbai’s gemstone market Zaveri Bazaar, Kolkata’s Burra Bazaar and Bowbazar, and Hyderabad’s Nizam-inspired designs.
Experts have also projected a 15 percent growth in the sports products sector, with the target of $186.97 million for 2030. This will make Indian sports goods and toys price-competitive as compared to those from China or Vietnam, which do not have similar FTAs with the UK. Workers in Jalandhar and UP may have to work overtime for the windfall, following the FTA.
India