The Indian textile industry is expected to experience a cyclical recovery in its market share in the U.S., according to Elara Capital.
This shift follows the implementation of the UK-India free-trade agreement (FTA), which aims to increase the competitiveness of Indian exports through the removal of key trade barriers. By lowering costs and duties, the agreement allows Indian firms to leverage a price advantage against global competitors.
Prerna Jhunjhunwala, Vice President-Equity Research at Elara Capital, said, "The textile industry will see a cyclical recovery in market share in the US."
The UK-India FTA became operational on July 15, 2024 [5]. Under the terms of the deal, India will receive duty-free access on about 99% of tariff lines [3]. In exchange, India will reduce tariffs on approximately 90% of tariff lines in a phased manner [4].
Industry experts said that the removal of import duties on cotton and the provision of zero-duty access for UK-origin textiles are primary drivers of this growth. These changes reduce the overhead for exporters and make Indian goods more attractive in international markets.
Certain companies are more exposed to the UK market than others. SP Apparels derives about 50% of its revenue from the UK [1], while Welspun Living derives around 10% of its revenue from that region [2].
The recovery in the U.S. market is viewed as a cyclical rebound, though other reports suggest the FTA also opens broader opportunities for expansion into the UK and European Union markets.
“The textile industry will see a cyclical recovery in market share in the US.”
The alignment of trade policies between India and the UK creates a ripple effect that extends to the U.S. market. By lowering the cost of raw materials and finished goods through the FTA, Indian textile manufacturers can lower their price points globally, making them more competitive in the U.S. against other Asian exporters.
