UK-India Free Trade Agreement: What it means for sourcing
fter years of back-and-forth, history was made on May 6, 2025, India and the United Kingdom finally inked a landmark Free Trade Agreement (FTA), reshaping the future of their economic ties. Over three years in the making, this deal slashes tariffs on 99% of Indian exports to the UK, including powerhouse sectors like textiles, footwear, and gems, while offering the UK a phased 90% tariff reduction on its exports to India, with most set to become duty-free within the next decade.
For Indian exporters, particularly in the home and lifestyle sectors, the deal creates new opportunities for growth. Products like bed linen, terry towels, and cotton-based textiles are expected to become more competitive in the UK due to tariff elimination. Traditional hubs such as Ludhiana and Tiruppur stand to benefit significantly from the anticipated demand surge.
On the UK side, retailers and importers gain access to a wider range of high-quality, competitively priced Indian products. The shift supports diversification of supply chains and aligns with the increasing demand for ethically sourced and sustainable goods.
As we, at Qalara, delve deeper into the specifics of the FTA, this blog will explore its transformative potential for sourcing professionals, manufacturers, and supply chain strategists in the home and lifestyle sectors. From tariff eliminations to new market access, the UK-India FTA heralds a new era of collaboration and growth.
Table of contents:
- Key Provisions Impacting Home & Lifestyle Sectors
- Implications for Sourcing and Supply Chains
- Impact on Indian Home & Lifestyle Exports
- Opportunities for UK Retailers and Importers
- Strategic Implications for Sourcing Professionals
- Broader Industry Impacts: Beyond Home & Lifestyle
- How Qalara empowers UK retailers to maximize the FTA advantage
- Conclusion: Navigating the New Trade Landscape
Key provisions impacting home & lifestyle sectors
• Tariff elimination on Indian exports to the UK
A cornerstone of the FTA is the removal of tariffs on 99% of Indian exports to the UK. Previously, Indian home textiles faced tariffs ranging from 10% to 12%, with yarn and fabric at around 4%. The elimination of these duties boosts the competitiveness of key product lines, including cotton bed linen, terry towels, and other home textiles.
• Tariff reductions on UK exports to India
In reciprocity, India has agreed to reduce tariffs on 90% of UK exports, with most becoming tariff-free within a decade. This includes significant tariff reductions on items like automobiles and alcoholic beverages, which previously faced duties as high as 100% and 150%, respectively. While these reductions primarily impact sectors outside home and lifestyle, they signify a mutual commitment to liberalizing trade across diverse industries.
• Support for the textile and apparel ecosystem
The agreement includes specific reductions in duties on apparel such as shirts, trousers, and women’s dresses, previously taxed at 10% to 12%, further strengthening India’s export edge. It also promotes growth in man-made fiber (MMF) segments, such as MMF carpets and synthetic packaging, which benefit from increased price competitiveness and trade creation effects.
Implications for sourcing and supply chains
The FTA’s provisions are set to reshape sourcing dynamics in the home and lifestyle industries:
- For UK retailers and importers, the removal of tariffs lowers procurement costs and expands access to competitively priced, quality goods from India.
- For Indian manufacturers, there’s renewed incentive to upgrade processes, adopt sustainable practices, and innovate. Initiatives like the proposed National Textile Fund aim to support MSMEs in making these transitions.
The result is a more agile, collaborative supply ecosystem, promoting resilience, sustainability, and mutual growth.
Impact on Indian home & lifestyle exports
• Increased competitiveness in key categories
Cotton-based products such as bed linen and terry towels are poised for substantial gains. Historical export data shows promising trends: cotton furnishings rose from $43.45 million in 2019 to $85.15 million in 2021 before stabilizing at $49.26 million in 2023. With tariffs now eliminated, India is better positioned to compete with countries like Bangladesh, which previously enjoyed preferential UK access.
• Market expansion for MMF and synthetic goods
As Fibre2Fashion highlighted, the deal opens the door for Indian MMF carpets and synthetic packaging goods in the UK. Although challenges remain, such as high input costs and sustainability expectations, the trade creation effect from reduced tariffs creates a clear incentive for manufacturers to align with global standards.
• Strengthening of traditional export hubs
Hubs like Ludhiana and Tiruppur are expected to see accelerated growth. In Ludhiana, the FTA levels a field previously tilted toward Bangladesh. Tiruppur, which accounts for 55% of India’s knitwear exports, recorded a 13% export increase in early FY 2024–25, with August alone seeing a 22% surge.
• Promotion of joint ventures and technology upgrades
The agreement encourages collaboration between Indian and UK firms, particularly through joint ventures and technology transfers. The National Textile Fund aims to support MSMEs in adopting renewable technologies and improving quality, aligning with growing UK consumer demand for sustainable products.
In summary, the UK-India FTA provides a significant boost to Indian home and lifestyle exporters by eliminating tariffs, opening new markets, and encouraging sustainable practices. This agreement positions India as a competitive and reliable sourcing destination for UK retailers and importers.
Also read: Top 12 products to source from India
Opportunities for UK retailers and importers
• Access to diverse and competitively priced products
Indian home and lifestyle products, including textiles, furnishings, and kitchenware, have long been recognized for their craftsmanship and affordability. The removal of tariffs, previously up to 12% on items like cotton T-shirts and home textiles, enhances the price competitiveness of these goods in the UK market. This change enables UK retailers to offer a broader selection of products to consumers, potentially increasing market share and customer satisfaction.
• Supply chain diversification
India’s robust manufacturing base and skilled labor force present a compelling alternative to traditional sourcing destinations. For UK buyers, this diversification mitigates risks related to geopolitical uncertainty and supply chain disruptions.
• Collaboration on sustainable production
The FTA sets the stage for partnerships in ethical manufacturing. UK businesses are increasingly prioritizing ESG (Environmental, Social, and Governance) compliance, and the agreement facilitates cooperation on sustainability. Indian MSMEs are supported in adopting renewable technologies that align with UK market expectations.
• Simplified customs and trade procedures
With mutual recognition of standards and streamlined customs protocols, compliance becomes easier and delays are reduced. These changes particularly benefit Small and Medium-sized Enterprises (SMEs) in the UK, allowing them to expand their sourcing reach without disproportionate administrative overhead.
The UK-India FTA gives UK retailers and importers a competitive edge with access to affordable products, diversified supply chains, easier trade, and opportunities for sustainable partnerships, boosting their growth in a fast-moving global market.
Strategic implications for sourcing professionals
• Rethinking global sourcing strategies
For sourcing professionals, India becomes a more attractive partner. The elimination of tariffs significantly enhances the cost-competitiveness of Indian home and lifestyle products, prompting a reevaluation of sourcing mixes previously dominated by China or Southeast Asia.
• Managing compliance and trade documentation
While trade flows will become smoother, professionals must ensure goods are properly classified under HS codes and meet rules-of-origin requirements. Close coordination with customs brokers and legal advisors will be critical to fully realize the FTA’s benefits.
• Building resilient, agile supply chains
Diversifying suppliers to include Indian partners enhances flexibility and responsiveness. It also allows businesses to quickly adapt to shifting consumer demands and market trends, especially in a landscape shaped by sustainability and geopolitical considerations.
Also read: Indian design and how it is evolving
Broader industry impacts: Beyond home & lifestyle
While the UK-India Free Trade Agreement (FTA) significantly benefits the home and lifestyle sectors, its influence extends to various other industries, promoting enhanced economic collaboration between the two nations.
- Automotive sector: Tariffs on UK-built vehicles, historically over 100%, will be reduced to 10% over a decade. This benefits both conventional and electric vehicles, potentially boosting UK auto exports and giving brands like Jaguar Land Rover a stronger foothold in India.
- Renewable energy collaboration: Both countries commit to advancing clean energy via joint ventures in solar, wind, and hydrogen technologies. The FTA supports cross-border investments and tech transfer in green infrastructure, contributing to shared sustainability goals.
- Services sector growth: Improved access for UK legal, financial, and telecom services is part of the agreement. This includes mutual recognition of professional qualifications, streamlined visa procedures, and reduced entry barriers, promoting deeper collaboration in knowledge industries.
How Qalara empowers UK retailers to maximize the FTA advantage
As UK retailers and importers navigate the new opportunities presented by the UK-India Free Trade Agreement (FTA), Qalara emerges as a strategic partner in optimizing sourcing from India. Specializing in home, kitchen, and lifestyle products, Qalara offers a comprehensive solution that aligns seamlessly with the FTA’s benefits.
• Streamlined access to Indian suppliers
Qalara brings a vast network of over verified Indian manufacturers and artisans, offering a catalog of more than 70,000 products. This extensive network ensures that UK retailers can efficiently source a diverse range of competitively priced, high-quality goods, now further advantaged by the elimination of tariffs under the FTA.
• End-to-end sourcing support
Beyond product access, Qalara provides end-to-end sourcing support, including customization, order management, quality assurance, and logistics coordination. This comprehensive approach simplifies the complexities of international trade, allowing UK retailers to focus on market expansion and customer engagement.
• Strategic partnerships enhancing UK market reach
Qalara’s partnership with the UK’s Giftware Association exemplifies its dedication to supporting UK retailers. This collaboration facilitates greater market access and provides UK businesses with insights and opportunities to thrive in the evolving trade landscape shaped by the FTA.
Qalara stands as a pivotal ally for UK retailers aiming to capitalize on the UK-India FTA, offering streamlined sourcing, comprehensive support, and a commitment to sustainable practices that align with modern consumer values.
Also read: Sustainability and India’s ethical edge
Conclusion: Navigating the new trade landscape
The UK-India Free Trade Agreement marks a transformative moment for sourcing and supply chain professionals in the home and lifestyle sectors. By removing tariffs and streamlining trade procedures, the FTA enables more seamless market access for competitively priced, high-quality Indian products, particularly textiles, furnishings, and homeware.
UK retailers gain new options to diversify sourcing, reduce costs, and meet consumer expectations for ethically produced goods. Indian manufacturers, meanwhile, are encouraged to modernize and expand, backed by supportive policy measures.
Ultimately, the FTA is more than a trade agreement, it’s a strategic platform for building resilient, sustainable, and forward-looking sourcing ecosystems. For businesses ready to adapt with agility and insight, this deal offers a valuable opportunity to thrive in a changing global economy.
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Looking to unlock these opportunities? Book a consultation with our sourcing experts or explore Qalara to start sourcing responsibly today.
~ Written by Utkarsha Rai
Also read: How to measure and optimize your retail KPIs
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