The elimination of a 12 per cent duty disadvantage under the India-UK Free Trade Agreement positions domestic textile and apparel exporters to capture up to $1 billion in incremental shipments. Currently holding a 6.9 per cent share of the UK’s textile import market - where India shipped $2.2 billion in FY26 - domestic manufacturers stand to expand their footprint to 10per cent. This margin reduction allows Indian suppliers to challenge Chinese competitors in high-volume categories like home textiles and readymade garments, though price competition against lower-cost regional producers like Bangladesh remains intense. Large, integrated textile companies are better positioned to capitalize on these opportunities due to their scale, established customer relationships, and stronger financial resources, notes Rohit Sadaka, Director - Corporate Ratings, India Ratings and Research (Ind-Ra).

Operational scale and ESG alignment determine long-term margin realization

While duty cuts elevate landed cost competitiveness, immediate margin gains face headwinds from buyer price adjustments, elevated freight costs, and stringent British compliance standards. Major integrated manufacturers, such as Gokaldas Exports and Arvind, are expanding production capacities and upgrading supply-chain traceability to meet ESG and Carbon Border Adjustment Mechanism (CBAM) requirements. In contrast, debt-funded expansions by smaller mills risk liquidity pressure if buyer approvals lag.

Backbone of credit rating and sector analysis in India

Founded in 1995, a Fitch Group subsidiary India Ratings and Research (Ind-Ra) provides credit ratings and economic research across Indian corporate, financial, and infrastructure sectors. The agency projects steady credit outlooks for large-scale textile exporters, supported by improving operating leverage and expanding international trade agreements.