On July 24, 2025, New Delhi and London turned the page on decades of trade barriers. The India–UK free trade agreement, once implemented, will give Indian textile exporters virtually duty-free access to one of the world’s richest markets. When Prime Minister Narendra Modi and his UK counterpart Keir Starmer signed the India-UK Comprehensive Economic Trade Agreement (CETA), they were not just inking a deal, they were orchestrating what could become the most transformative moment for India’s textile industry in decades.

The numbers tell a compelling story. Britain imports $27 billion worth of textiles annually, yet India captures merely 6.6 per cent of this lucrative market. With the stroke of a pen, this agreement eliminates the 8-12 per cent tariff barrier that has long handicapped Indian exporters, instantly levelling a playing field where competitors like Bangladesh and Türkiye have enjoyed duty-free access for years.

When Titans Realign: The Global Textile Chessboard
The timing could not be more fortuitous. As geopolitical winds shift across continents, the global textile supply chain is experiencing its most dramatic reconfiguration since the dawn of globalisation. China, despite maintaining a formidable 25 per cent share of UK textile imports, finds itself increasingly isolated as Western brands implement their ‘China Plus One’ strategies.

The numbers are stark: 43 per cent of leading US fashion companies now source less than 10 per cent of their apparel from China, compared to just 18 per cent in 2018.1 Meanwhile, China’s apparel exports declined 30 per cent year-on-year in February 2025 to $6.4 billion.2 This seismic shift creates unprecedented opportunities for nimble competitors, and India stands perfectly positioned to capitalise.

Vietnam, currently the world’s third-largest textile exporter with $42.1 billion in annual shipments, faces its own challenges. Its textile exports reached $17.58 billion in the first five months of 2025. However, the country depends heavily on imported raw materials, limiting its long-term competitiveness. Bangladesh, the ready-made garment (RMG) powerhouse, exported $38.48 billion worth of RMG in 2024, but recent political instability and rising labour costs are prompting buyers to diversify their sourcing strategies.

The Tiruppur Transformation: From Village Looms to Global Runways
Nowhere is the CETA's impact more tangible than in Tiruppur, Tamil Nadu’s knitwear capital. This industrial ecosystem, housing over 20,000 units and directly employing 600,000 workers, exemplifies India’s textile prowess. KM Subramanian, President of the Tiruppur Exporters Association, projects knitwear exports to the UK to surge from ₹8,000 crore to ₹13,000 crore, a 62.5 per cent increase that reflects the cluster’s aggressive expansion.

The preparation began months before the CETA’s signing. The top 2,000 knitwear units in Tiruppur have already embarked on capacity expansion, installing new machinery and recruiting skilled workers in anticipation of the UK opportunity. This proactive approach distinguishes India from competitors who often scramble to meet sudden demand spikes.

Yet Tiruppur’s story also illuminates broader challenges facing India’s textile clusters. Despite achieving an annual turnover of ₹70,000 crore, the cluster struggles with technological upgradation needs. Industry leaders estimate that around 50 per cent of the current capacity requires modernisation to compete effectively against Vietnam’s state-of-the-art facilities and Bangladesh’s cost advantages.

Surat’s Synthetic Symphony: The Polyester Powerhouse
While Tiruppur dominates cotton knitwear, Surat is India’s synthetic fabric stronghold. This city produces 90 per cent of India’s polyester fabric and operates over 650,000 power looms, generating 40 million meters of fabric daily. For the UK market, increasingly hungry for performance textiles and synthetic blends, Surat’s capabilities represent a strategic asset.

The city’s 65,000 textile factories employ over 1.2 million workers directly, creating an industrial ecosystem that spans from yarn production to finished garments. Surat accounts for 40 per cent of India’s man-made fibre production and 18 per cent of synthetic fibre exports, positioning it perfectly to capture UK demand for technical textiles and fashion-forward synthetics.

The UK Market: A $27 Billion Canvas Awaiting Indian Artistry
Understanding the UK textile landscape reveals why the CETA represents a watershed moment. The UK textile market, valued at $35.43 billion in 2024, imports the majority of its textile needs. China commands a 25 per cent market share, followed by Bangladesh at 15 per cent and Turkiye at 8.5 per cent. India’s current 6.6 per cent share shows enormous room for expansion.

The market structure favours India’s diverse manufacturing capabilities. Ready-made garments comprise 83 per cent of UK textile imports, valued at approximately $22.4 billion annually. Home textiles, technical fabrics, and specialty items constitute the remainder—segments where Indian manufacturers have demonstrated consistent quality and innovation.

CareEdge Ratings projects India’s UK market share to double from 6 per cent to 12 per cent within the medium term. This translates to potential additional exports worth $1.1-1.2 billion annually, a conservative estimate given the pent-up demand and tariff elimination.

The Employment Engine: Powering India’s Economic Transformation
Beyond export statistics lies a more profound narrative: the CETA’s potential to accelerate employment generation across India’s textile belt. The textile industry directly employs over 45 million people, making it the second-largest employer after agriculture. Women comprise a significant portion of this workforce, with 88 per cent of trainees under government skilling programmes being women.

The sector’s rural concentration—70 per cent of textile workers operate in rural areas, means the CETA-driven growth will directly benefit India’s most vulnerable communities. Each additional $100 million in exports typically generates 15,000-20,000 direct jobs in labour-intensive segments like garment manufacturing.

Navigating Headwinds: Challenges in the Golden Opportunity
However, this golden opportunity too comes with significant challenges. India’s cotton, among the world’s most expensive, constrains manufacturers’ competitiveness. The challenge for the industry and policymakers is to strike a balance, upholding farmer welfare while also enabling manufacturers to compete efficiently on the international stage.

Secondly, infrastructure bottlenecks persist across major textile clusters. Logistics costs can offset tariff advantages if port connectivity, power supply, and digital infrastructure do not match international standards. The Indian government’s PM MITRA scheme, establishing seven integrated textile parks, aims to address these structural constraints.

Next, the UK buyers increasingly demand sustainable and ethically produced textiles, requiring Indian manufacturers to invest in clean technologies and transparent supply chains. Tiruppur’s achievement as the first global textile cluster to implement Zero Liquid Discharge (ZLD) demonstrates the Indian industry’s capability to meet these standards.

The Competitive Calculus: India vs. the World
The India-UK CETA is not an isolated development; it is part of a broader recalibration of global textile trade. The US textile imports from India reached $9.71 billion in 2024, representing a 7.96 per cent market share. However, potential US tariffs of 25 per cent could erode this advantage, making the UK market even more critical for Indian exporters.

Vietnam’s 5.9 per cent share in global textile exports surpasses both Bangladesh’s 5.1 per cent and India’s 3.5 per cent. This performance gap reflects Vietnam’s aggressive FTA strategy and manufacturing infrastructure investments. The CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) and EVFTA (European Union-Vietnam Free Trade Agreement) provide Vietnamese textiles preferential access to major markets, advantages India must now match through bilateral agreements like the UK CETA.

Bangladesh’s $70 billion total export earnings, with ready-made garments contributing a major chunk, demonstrate the economic impact of textile specialisation. However, India has a better diversified textile portfolio and superior backward integration capabilities.

Technology and Transformation: The Digital Thread
The textile industry’s future lies not just in traditional manufacturing but in embracing Industry 4.0 technologies. Indian garment exports reached $17.3 billion in FY 2023-24, with AI and automation driving 20-30 per cent cost reductions across leading manufacturers. This technological transformation becomes crucial as labour costs rise across Asia.

Surat’s manufacturers invest heavily in airjet looms and digital printing, enabling rapid design changes and reduced time-to-market. Tiruppur's ZLD systems process 120 million litres daily, demonstrating environmental leadership that appeals to conscious consumers.