Team Siliconindia

• India and UK sign landmark CETA during PM Modi's London visit, targeting $34B in bilateral trade by 2040
• Deal grants 99% of Indian exports, including textiles, zero-duty access to UK, boosting RMG exports and regional hubs
• Industry leaders hail CETA as a game-changer, but stress need for compliance upgrades and caution over UK’s sustainability norms

On the recent visit of Prime Minister Narendra Modi to London, India and the United Kingdom formally signed a Comprehensive Economic and Trade Agreement (CETA), which is an important step towards consolidating bilateral economic ties.

The agreement signed by Commerce Minister Piyush Goyal and his British counterpart Jonathan Reynold in the presence of Prime Minister Modi and UK Prime Minister Keir Starmer aims to lower tariffs on a host of items ranging from textiles, whisky, and automobiles to improve market opportunities for companies in the two nations.

The commerce negotiations, extending more than three years with periodic breakthroughs, concluded in May. Representatives on both sides stepped up the pace to seal the agreement against a backdrop of worldwide tariff disruptions triggered by the Trump administration.

Uniting two of the globe's leading economies ranked sixth and fifth worldwide the agreement has an ambitious aim of raising two-way trade by $34 billion in 2040.

For the United Kingdom, it is its biggest trade deal since exiting the European Union in 2020. For India, it represents a significant strategic achievement, securing a comprehensive economic relationship with an advanced economy and potentially paving the way for such arrangements with the European Union and other partners around the world.

99 percent of Indian goods exported to the UK including more than 1,143 vital textile and apparel products, as per reports will now have zero-duty access, giving Indian exporters a more robust presence in the British market, under the deal.

Responding to the development. Sudhir Sekhri, Chairman AEPC, stated, "The signing of the historic India-UK bilateral trade agreement, is a momentous occasion in enhancing the economic and strategic partnership between the two countries. This agreement will bring in a new era of garment trade with the UK. This agreement will improve market access, increase investment and employment opportunities in the garment industry, along with new business opportunities for consumers and businesses alike on both sides".

He went on to say: "The India-UK CETA will not only provide competitive market access to the Indian apparel products in the UK market but also enhance the trust and reliability factor by simplifying customs formalities and mutual recognition of standards, hence minimizing the compliance burdens for the Indian apparel exporters. With duty-free access, the exports of apparel to the UK will see a new thrust and momentum in the forthcoming years".

Dr. A. Sakthivel, TEA Honorary Chairman and AEPC Vice Chairman, welcomed the signing of the pact and praised both the Prime Minister and the Ministry of Commerce & Industry for what he described as a game-changing agreement for India's textile and apparel sector.

He maintained: “This agreement paves the way for a historic leap forward for our industry, it resonates strongly with our national vision to place India among the top three global economies”.

Also Read: India Aims $100 Billion Textiles Exports by 2030, Says MoS Margherita

Dr. Sakthivel further shared with Fibre2Fashion the deal’s benefits for regional textile hubs, citing improved access for key manufacturing centres including Tiruppur, Surat, Ludhiana, Pune, Chennai, West Bengal, and Assam.

He also noted that Indian exporters are now better placed to challenge their counterparts from Bangladesh, Vietnam, and China in the UK's garment and textile market.

Considering the probable spur to India's readymade garment (RMG) industry, Dr. Sakthivel stated: "We project that exports of RMG to the UK would increase more than two-fold from $1.45 billion to around $3.25 billion. In this, knitwear will grow from $0.8 billion to around $2 billion, which will be almost 70 per cent of the overall RMG exports to the UK".

Talking to Fibre2Fashion, N Thirukkumaran, chairman at Esstee Exports and General Secretary of TEA stated that India's garment exports would double in the next 2-3 years due to the India-UK CETA. He also added that this pact could act as a template for other successful FTAs, including with the European Union.

Thirukkumaran also reiterated the job-creation opportunities of the India-UK CETA in the textiles industry, which is the second-largest employer in India, next to agriculture.

In the meantime, engaging with Fibre2Fashion, Rahul Mehta, the chief mentor of the Clothing Manufacturers Association of India (CMAI) emphasized that the India-UK CETA is clearly going to make a very big difference to textiles and apparel exports from India, with prices being brought down by nearly 10 per cent.

"Although I may not be as ecstatic as some of my colleagues, I do envision our garment exports going up from the current $1.3 billion to likely around $2.0 to $2.2 billion in the next two to three years", Mehta said.

“That said, we must remember the zero-duty regime will likely take at least a year, if not longer, to come into effect. Plus, UK buyers have stringent compliance and sustainability requirements. Indian exporters will need to significantly upgrade their operations to meet these growing expectations particularly around sustainability”, he added.

While not very worried about the possible effects of the FTA on India's internal market, the CMAI top mentor was however surprised that this matter has mostly been overlooked in discussions on the media. "It is zero percent on both sides, remember!" Mehta concluded with a caution.