India-UK trade deal to prove boon for textile hub Ludhiana
India is poised to see a 30-45 per cent surge in textile exports to the UK by 2030, following the signing of a landmark India-UK Free Trade Agreement (FTA) on Thursday — a move expected to significantly benefit production hubs such as Ludhiana in Punjab.
Under the Comprehensive Economic and Trade Agreement, signed in the presence of Prime Minister Narendra Modi and his British counterpart Keir Starmer, the UK will reduce import duties to zero on 99 per cent of Indian exports.
A day after the historic pact, Commerce Ministry officials said the duty-free access for textiles and clothing will expand India’s share in the UK’s $27-billion textile import market. The projected 30-45 per cent rise in exports would translate into an additional $500-800 million in value.
“Indian readymade garments gain a cost advantage over China, Bangladesh, Vietnam and Cambodia, potentially doubling India’s share of UK textile imports from 6 per cent to 12 per cent, or $1.1–1.2 billion annually,” the ministry said. India’s current global textile exports stand at $37 billion.
‘May take away perks over carbon tax’
India may consider taking away certain concessions granted under the India-UK trade pact if the UK imposes non-tariff barriers like carbon border adjustment mechanism (CBAM), a government source said on Friday. The UK is scheduled to implement CBAM in 2027 to address carbon leakage and support the country’s decarbonisation goals. Under this, those exporting goods to the UK have to report the carbon content of the commodity, based on which they will be taxed.
The agreement is expected to take effect within a year, pending ratification by the UK Parliament. “It will be discussed in the select committee and passed by both Houses,” Commerce Secretary Sunil Barthwal said on Friday, expressing hope for swift implementation. He added that the government would focus on building the capacity of Indian exporters to maximise benefits from the deal.
The FTA is also expected to boost agricultural and processed food exports to the UK by over 50 per cent in the next three years. Key gainers include shrimp, rice, fruits, nuts and preserved vegetables.
Engineering goods — including electrical machinery, auto parts, industrial equipment and construction machinery — are set to benefit significantly, with exports to the UK projected to nearly double within five years to over $7.5 billion. The UK is currently India’s sixth-largest engineering export destination.
India’s engineering exports reached a record $116.67 billion in 2024–25 (April–March), with $4.28 billion going to the UK. By contrast, the UK’s global engineering imports stood at $193.52 billion during the same period.
In the leather and footwear segment, exports to the UK are expected to touch $1 billion in the next two years — a major boost for manufacturers and exporters in states like Uttar Pradesh, Tamil Nadu, West Bengal and Delhi-NCR.
The UK remains one of India’s top 10 export destinations. In 2024-25, India exported goods worth $14.55 billion to the UK and imported goods valued at $8.61 billion, according to Commerce Ministry data.
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