With the country sealing the long-anticipated India–UK Free Trade Agreement (FTA), the Indian textiles and apparel (T&A) industry finds itself at a crucial inflection point in FY2025–26. This historic agreement—the first major bilateral pact with a developed country in over a decade—opens a duty-free gateway for 99 per cent of Indian goods, including garments and textiles, into the UK market, eliminating tariffs of up to 16 per cent. For Indian giants like Welspun, Arvind, Raymond, and Vardhman, the implications are clear: greater competitiveness and wider reach in one of the world’s most fashion-forward economies.
But this UK breakthrough is just one of the many threads weaving the tapestry of India’s export prospects. According to Q1 FY26 data, India’s ready-made garment (RMG) exports surged from $ 3.85 billion to $ 4.19 billion—a near 9 per cent year-on-year growth. The US remains the top destination, accounting for over one-third of this trade, followed by the UK, UAE, Germany, and Spain. This upward momentum, particularly with Tirupur (India’s knitwear powerhouse) clocking an 11.7 per cent rise in exports, underlines the country’s growing stature as a reliable and scalable apparel exporter.
Japan, meanwhile, presents an untapped yet promising avenue. At the recently concluded 16th India Trend Fair in Tokyo, Union Minister Giriraj Singh outlined India’s textile potential to Japanese corporations. With Japan’s T&A imports crossing $ 23 billion last year, and India contributing just $ 234.5 million, the opportunity is enormous. Companies like Asahi Kasei, Workman Co., and YKK Corporation have reportedly expressed strong interest in expanding or investing in India—especially in the PM MITRA Parks ecosystem, designed to attract global investment with plug-and-play infrastructure and state subsidies. The fair, with over 150 Indian exhibitors, reinforced India’s positioning as a hub for sustainable, high-quality manufacturing tailored for global buyers.
However, the global trade environment remains volatile. The US—India’s largest T&A export market—is undergoing a tariff realignment under the Trump administration. While China’s share in US textile imports has sharply declined from 27 per cent to 14 per cent, India’s has grown from 9 per cent to 12 per cent. Yet, uncertainty over ongoing India-US trade talks is causing hesitation in boardrooms. Competing nations like Vietnam have shown agility—successfully negotiating their steep 46 per cent tariff down to 20 per cent. India must expedite similar negotiations to maintain and expand its US market share.
Compounding matters, recent US tariff hikes on Bangladesh, Cambodia, and Sri Lanka (35–36 per cent) may create near-term opportunities for India. However, Vietnam’s proactive diplomacy and perceived edge in manufacturing efficiency pose a competitive threat. To level the playing field, India must double down on value-added exports, sustainable manufacturing, and quick policy responses.
In summary, FY2025–26 offers a mixed bag: lucrative windows in the UK and Japan, strong Q1 RMG performance, and a growing foothold in the US. But these gains must be guarded with strategic trade diplomacy, infrastructure readiness, and relentless quality enhancement.