India (Commonwealth Union)_ The United Kingdom and India maintain a unique trading relationship, with a high growth in the services sector. Additionally, decades of lobbying across sectors, strategic advisory firms, non-profit organizations, and a large Indian diaspora in the United Kingdom have contributed to the development of strong business-to-business and government-to-business partnerships. India is the second largest investor in the United Kingdom, whereas the United Kingdom is the sixth largest investor in India.
The Indian textile sector is eagerly anticipating the establishment of the Free Trade Agreement (FTA) with the United Kingdom. Once duty-free access to the global garment market is granted, the sector hopes that it will be able to compete more effectively with Bangladesh. Both India and the United Kingdom have signaled their desire for an early completion of FTA discussions. After a hiatus of over four months, the sixth round of FTA discussions between the United Kingdom and India was conducted last month with the involvement of Piyush Goyal, the Indian minister of industry and commerce. They instructed their negotiators to avoid bringing up sensitive topics in favor of resolving conflicts and moving on.
The United Kingdom is a major market, and the Indian textile sector will have duty-free access to the large market as a result of the planned trade deal. Sanjay Jain, former head of the Confederation of Indian Textile Industries (CITI) and managing director of TT Limited, stated that this deal will support the industry in several ways as well as boost the competitiveness of the market. According to him, the trade deal is expected to be signed in the first half of 2023. The Indian business community expects that the signing of the FTA would equalize the playing field with Bangladesh, which has duty-free access to the United Kingdom owing to its categorization as a Least Developed Country (LDC). At present, the United Kingdom imposes a 10% duty on Indian apparel exports.
During the latest meeting of the CII’s Texcon conference held in New Delhi, K Vel Krishna, managing partner of Deiveegam Dyers, said, “The proposed FTA with the UK is expected to be landmark development as it can provide better advantage to Indian exporters. They will be able to provide buyers in the UK with competitive prices. They would have the same duty-free access to the market as exporters from Bangladesh.”
According to Raja M. Shanmugham, the former president of the Tirupur Exporters’ Association, FTAs are essential economic agreements between trading nations in this era of the global market (TEA). He stated that the planned trade deal with the United Kingdom is important because it will increase access to a substantial consumer market. After that, a comparable trade pact would be reached with Europe. He added that a speedy conclusion of FTA talks with all possible trading partners will support the Indian economy.
K Selvaraju, general secretary of the South Indian Mills Association (SIMA), expressed hopes over the FTA deal. He said, “The proposed trade agreement with the UK is anticipated to open access to a significant market. Indian exporters would be able to export there duty-free, which will enhance the country’s textile industry and, more specifically, the garment industry. However, the security of raw materials must be ensured by the Indian government. The current price differential between Indian and ICE cotton is crippling Indian exporters’ ability to compete.”
According to trading data, Bangladesh is the second leading supplier of textiles to the United Kingdom, whereas India is the fifth leading supplier. Bangladesh accounts for 14.45% of the UK’s total garment imports, or $3.019 billion worth supplies. China’s portion was 21.57 percent. In 2021, Turkey and Italy both had larger market shares than India’s 5.24 percent ($1.094 billion). Once the FTA becomes effective, India may anticipate a rise in its market share in the United Kingdom.
