How UK, EU deals could unlock $220 billion market for India’s apparel exporters

India’s apparel exports stand at roughly $16 billion. That is about 43% of the country’s total textile and apparel shipments abroad. Yet on the global stage, the number looks small. India holds only 4 to 5% of world apparel trade, despite running one of the largest cotton and manufacturing bases anywhere.

Why India lags in apparel exports 

According to the Jefferies report, the gap has less to do with capability and more to do with tariffs. Indian exporters selling into Europe face a duty disadvantage of 10 to 12% compared with rivals such as Bangladesh, Pakistan and Turkey. Those countries enjoy preferential or duty-free access while India does not.

Bangladesh has leaned on its status as a least developed country to secure duty-free entry into key markets. Vietnam has built an extensive web of free trade agreements. Both nations have used this edge to pull ahead of India in apparel sourcing over the past decade.

Bangladesh’s share of UK apparel imports climbed from 12% in 2015 to 22% in 2025. Its share of EU imports rose from 11% to 15% over the same period. Vietnam’s share of the US apparel import market went from 12% to 21%. India, meanwhile, has stayed largely on the margins, holding just 3% of EU apparel imports and 6% of UK apparel imports.

UK, EU trade deals cut tariffs 

The UK free trade agreement, effective July 2026, cut tariffs on Indian textile products from a range of 4 to 12% down to near zero. A similar deal with the EU is under discussion and could come into force from 2027, the report noted.

As per the report, this would remove much of the cost disadvantage India has carried against Bangladesh, Pakistan and Turkey. It would not hand India an edge over those countries. It would simply put Indian exporters on a level footing with them in two of the world’s largest apparel markets.

How UK, EU deals could boost exports 

The report pointed to three drivers that could reinforce each other over the coming years. 

The UK deal alone gives Indian exporters near-zero duty access to a market where they were previously priced out against duty-free rivals. A similar agreement with the EU would extend that relief to a market that alone imports more than $200 billion worth of apparel each year. 

Together, the two deals give India entry into a combined textile and apparel import market of roughly $220 billion on terms it has never had before. This does not give India an advantage over Bangladesh, Pakistan or Turkey. It simply removes the 10 to 12% cost penalty Indian exporters have absorbed while those countries shipped in duty-free, as per the report.

Bangladesh’s duty-free advantage fades 

Bangladesh built its apparel export machine on the back of its least developed country status, which gave it duty-free access to the UK and the EU. That access is not permanent. As Bangladesh graduates out of LDC status, it will lose those preferences in stages. 

Its share of UK apparel imports had already climbed from 12% in 2015 to 22% in 2025, and its EU share rose from 11% to 15% over the same period, largely on the back of that advantage, as per the report. Once the duty edge narrows, some of that sourcing volume becomes available for reallocation. The report suggested India is among the countries positioned to absorb a share of it, alongside Vietnam and others.

China+1 and government support 

The pullback from China as a single-sourcing base has been underway for close to a decade, and it shows no sign of reversing. Large retailers such as Walmart, Target and Costco have also been narrowing their vendor base, favouring fewer, larger and more compliant suppliers who can guarantee scale and consistency.

India’s government has tried to position domestic manufacturers to capture that shift. The PLI scheme for textiles carries a total outlay of Rs 10,683 crore, with Rs 1,148 crore allocated for FY26, aimed specifically at man-made fibre apparel, MMF fabrics and technical textiles, categories where India has historically been under-represented. 

According to the report, eligibility thresholds under the scheme were eased this year to bring in a wider set of manufacturers. Separately, the PM MITRA Parks initiative, with an outlay of Rs 4,445 crore, is building integrated textile parks meant to cut logistics costs; seven parks have been approved so far, drawing memoranda of understanding worth more than Rs 27,000 crore.

Who stands to gain

The report named a handful of listed Indian garment makers it sees as direct beneficiaries. Gokaldas Exports, described as India’s largest apparel exporter, has revenue of about Rs 4000 crore and capacity of roughly 87 million garments across facilities in India, Kenya and Ethiopia. 

KPR Mills runs a fully integrated operation from yarn to finished garments, with garmenting capacity of about 204 million pieces, the highest among its listed peers. Pearl Global Industries manufactures across five countries, including Bangladesh and Vietnam, with exports making up nearly 97% of its Rs 5000 crore revenue. Raymond Lifestyle was flagged too, though its exposure is more indirect, with its garmenting business backed by India’s largest menswear retail franchise.

Challenges facing India’s apparel exporters 

None of this erases India’s structural weaknesses overnight. The Jefferies report noted that India’s apparel exporters have historically had smaller garmenting scale than competitors, higher logistics and compliance costs, and limited coverage under free trade agreements. The product mix is also tilted toward cotton, at a time when global demand is shifting toward man-made fibre apparel, sportswear and athleisure.

Even so, the combination of tariff parity, Bangladesh’s changing status and continued supply chain diversification gives India a rare alignment of tailwinds. Whether exporters can convert that opening into actual market share will depend on how quickly capacity, compliance and product mix catch up with the opportunity.