Stories
India's FTAs Offer Market Access, But Policy Stability is Key for Export Growth
- •The India–UK CETA, effective July 2026, grants 99% of Indian exports duty-free access to the UK, including 1,143 textile lines, opening a $30 billion market and potentially creating 3.5 lakh jobs.
- •Despite new FTAs with the UK and EU, India's textile and apparel exports have lagged, with apparel exports falling from $17 billion in 2015 to $16 billion in 2025, while competitors like Vietnam and Bangladesh doubled theirs.
- •Structural domestic issues like high power costs, capital costs, and rising labor costs have hindered India's export performance, though recent reforms have begun to address these.
- •Inconsistent policy, such as the fluctuating cotton import duty and QCOs on man-made fibers, creates uncertainty for manufacturers and discourages investment in new capacity.
- •Labor flexibility and predictable minimum wage policies are crucial for attracting investment and job creation, with states needing to ensure stability to maintain India's credibility as an investment destination.
Key Questions Answered
India's free trade agreements (FTAs) are expected to boost textile exports and generate jobs, particularly with duty-free access to markets like New Zealand, the UK, and the EU. However, experts note that FTAs alone cannot guarantee strong export growth without improved competitiveness and effective implementation.
Policy stability is crucial for future trade agreements to ensure that negotiated benefits translate into actual claims at the border and to provide predictability to trade flows. A lack of stability in policy execution can affect how partners assess ongoing negotiations.
India could potentially surpass Bangladesh in textile exports, especially with new trade agreements that offer duty-free access to markets like the UK and EU, which would boost India's competitiveness. However, achieving sustained export and market-share gains will depend on execution, productivity, and manufacturing competitiveness.
