UK–India trade agreement opens new sourcing and growth pathways

The UK–India Free Trade Agreement, formally agreed on 6 May 2025, is expected to be implemented imminently and possibly even this May. For UK importers and exporters, the agreement’s launch will create immediate commercial implications across sourcing, pricing and market access.

With tariffs set to be removed or reduced across the majority of goods, businesses are assessing how quickly they can realign supply chains to capture the benefits.

At the core of the agreement is the elimination of duties on 99% of Indian textile, garment and footwear exports to the UK. Import tariffs that typically ranged between 8% and 12% will fall to zero, delivering an immediate improvement in landed costs and strengthening India’s position relative to established sourcing markets.

This is expected to accelerate a shift in sourcing strategies. The UK imported more than £21bn of textiles in 2024, with India accounting for a relatively modest share. That proportion is now set to increase, as retailers look to rebalance supply chains, reduce duty exposure and diversify away from single-country sourcing models.

Over time, exports from India to the UK are forecast to grow significantly, with some categories seeing rapid expansion as suppliers and buyers scale up volumes. For UK brands, the agreement also reduces administrative complexity at the border, supporting more predictable and efficient trade flows.

The benefits extend in both directions. India will reduce tariffs across around 90% of product lines, improving access for UK exporters in sectors including automotive and premium consumer goods. Greater access to public procurement opportunities and stronger intellectual property protections are also expected to support UK businesses targeting India’s fast-growing consumer market.

Capacity and disruption shape the near-term outlook

While the commercial case for increased UK–India trade is clear, the operational environment remains complex.

Demand for Indian manufacturing is rising not only from the UK, but also from the EU and the United States. This convergence is placing pressure on production capacity and, critically, on freight networks serving India–Europe and India–UK corridors.

Ongoing disruption linked to the Middle East is compounding these challenges. Ocean freight is affected by rerouting and congestion, while air freight capacity remains constrained by fuel availability and network adjustments. As a result, transport capacity is tightening, with earlier booking cycles and upward pressure on rates where utilisation peaks.

For businesses looking to benefit from tariff reductions, this creates a transitional phase. Cost savings at origin can be diluted by higher freight rates, longer lead times or reduced schedule reliability if capacity is not secured early.

Turning trade opportunity into delivered value

The UK–India agreement creates a clear opportunity to improve margins, diversify sourcing and access new markets. However, realising that value depends on how effectively supply chains are planned and executed in a constrained and volatile environment.

For fashion and retail supply chains in particular, longer production and transit timelines from India require earlier alignment between sourcing, production and logistics. Securing capacity, selecting the right routing strategies and maintaining visibility across the supply chain will be critical.

Noatum Logistics supports customers in translating trade agreements into operational advantage. Through integrated supply chain solutions, multimodal routing expertise and real-time visibility tools, we help businesses align sourcing decisions with capacity realities, manage cost exposure and maintain reliable flow.

If you are reviewing your India sourcing strategy or exploring export opportunities, speak to Noatum Logistics early. In a market where capacity tightens ahead of demand shifts, preparation is what turns tariff savings into measurable performance gains.