CHENNAI: With the implementation of important free trade agreements (FTAs), the textile industry is excited about export opportunities. Britain’s deal, which began on Wednesday, eliminates tariffs of up to 12% and brings it into parity with major competitors such as Bangladesh and Vietnam. While companies of all sizes are actively negotiating orders, concerns remain that India will not be able to fully exploit this potential due to supply chain fragmentation, long lead times and lack of manufacturing scale.Prabhu Dhamodaran, convenor of the Indian Texpreneurs Federation, said the FTA is already creating a demand drag. “Unlike some previous deals, Indian exporters have long-standing relationships with buyers in the UK, including brands like Primark, Next, Tesco, M&S and supermarkets and smaller brands and can immediately scale up exports. We are already seeing a lot of inbound requests and trail orders as supply concentration and growing concerns about political stability create a favorable environment. Indian units can immediately seize the opportunities and exports are expected to double to 12% in the next four to five years,” he said.
“Medium and small companies are evaluating incremental automation technologies and can begin investing in capacity enhancements, modernization and integration when they have clear visibility on order and payment timing,” Dhamodharan said.India currently accounts for 6% of UK apparel imports. In addition to tariff differences, the industry struggles to compete on cost due to fragmented supply chains and high input costs, including the cost of MMF (man-made fiber) and cotton fabric, and relatively low labor productivity.Various industry experts TOI spoke to said the challenges lie in both value-added and high-volume sectors, including cotton textiles, where India has a strong domestic ecosystem. A medium-scale exporter, on condition of anonymity, told TOI that the difference could be as much as 20%-30%, mainly due to the higher cost of man-made fabrics. Exporters believe that the government should encourage the MMF fabric ecosystem and strengthen the domestic cotton supply chain.Hitesh Jain, strategist at Yes Securities, said the sector cannot effectively leverage FTAs like the auto or pharma industries. “Trade agreements may improve market access, but preferential market access in the region is unlikely to translate into sustained export growth. Our modeling reflects structural challenges such as declining competitiveness, shifting global demand patterns. Vietnam and other countries have received a plus in the region from China, which limits incremental gains from tariff liberalization alone.“Pointing out that the currency weakness has not helped exporters in recent months, he said, “Due to high import dependence, our landing costs were high, which negated our export competitiveness even during the rupee depreciation.”
