India opportunity for UK businesses amid capacity pressures

New trade agreements with the UK and EU are already encouraging buyers to diversify sourcing, while a potential deal with the US is now in abeyance following the Supreme Court’s decision to strike down tariffs introduced under the International Emergency Economic Powers Act (IEEPA).

The interim US–India trade arrangement announced in early February proposed reducing tariffs on Indian goods from 50% to 18%, prompting a surge of forward bookings to the US as buyers anticipated improved pricing.

However, the situation has since become more complex, after the US Supreme Court ruling on 20 February determined tariffs introduced under IEEPA were unlawful, creating uncertainty over future duties and whether recently negotiated trade arrangements will remain unchanged.

Despite the legal uncertainty, India has confirmed it is not reconsidering its bilateral trade agreement with the United States, while the UK and EU trade agreements continue their implementation.

UK and EU agreements reshape sourcing economics

While US policy remains unclear, India’s trade agreements with the UK and EU are more immediately tangible for British businesses.

Historically, UK importers paid tariffs of roughly 8–12% on many Indian textile and apparel goods. The new agreement removes most of these duties, dramatically improving landed cost competitiveness.

The impact could be significant:

  • The UK imported £21.1bn of textiles in 2024, with India supplying around 6%.
  • Forecasts suggest Indian textile exports to the UK could grow 30–45%.
  • Apparel and home textile exports to the UK could double within five to six years.
  • Wider bilateral trade may increase by £25.5bn by 2040.

For UK retailers and manufacturers, this creates three immediate advantages:

  1. Improved margins from lower duty exposure.
  2. Diversified sourcing to minimise country dependency.
  3. Faster customs processing and reduced administrative cost.

The benefit is not limited to imports. UK exporters may also see improved market access into India as regulatory processes simplify and trade volumes expand.

The short-term challenge is likely to be space, not supply

The difficulty lies in timing. Demand from three major consumer markets has been rising simultaneously and while factory output can increase relatively quickly, vessel and air cargo capacity may not expand at the same pace, and has been further challenged by the Middle East situation.

The result is a transitional capacity squeeze with:

  • Space filling weeks in advance.
  • Front-loading pushing bookings earlier in production cycles.
  • Carriers testing rate increases where utilisation spikes.
  • Potential schedule pressure during peak order periods.

If the US trade deal is saved and American buying accelerates, competition for space could intensify further, particularly on India–Europe and India–UK corridors.

Turning trade advantage into commercial advantage

Noatum Logistics supports UK importers and exporters by coordinating sourcing, vendor management and transport capacity together. By aligning forecasts with origin partners and carriers, we help customers secure space early, protect lead times and ensure tariff savings translate into real margin improvement.

Our teams provide routing strategy, compliance guidance and realistic transit planning across India, the UK, Europe and the United States, helping businesses adapt confidently as global trade patterns evolve.

If you are expanding sourcing from India or reviewing export opportunities, speak to Noatum Logistics early. In a market where capacity tightens before supply chains adjust, preparation is the difference between theoretical savings and delivered value.