Two major sectors that have a dominant presence of Micro, Small and Medium-scale Enterprises (MSMEs) and are expected to gain immensely from the India-U.K. Free Trade Agreement are textiles and engineering.

Elimination of tariffs on textiles and garments from the earlier average level of 12% will remove the duty disadvantage that the Indian exporters faced in the UK with competitors such as Bangladesh and Cambodia, said government officials.

The segments poised for exponential growth include ready-made garments, home textiles, carpets, and handicrafts. While the U.K.’s total imports of $26.95 billion of textile and clothing are lower than India’s global exports of $ 36.71 billion, India still supplies only $1.79 billion to the U.K. With the FTA promising duty-free access and removal of trade barriers, this sector is well-positioned to increase its footprint in the U.K. market, they said.

In engineering, 1,659 tariff lines have been made duty-free giving a major boost to exports. Non-ferrous metals like Copper, Aluminium, Nickel, and Zinc, and other base metals will enjoy zero-duty access. The UK will also remove all tariffs on industrial machinery and electrical machinery and in the automotive sector, conventional vehicles and auto components will get duty-free access.

The expectation is that the duty-free engineering goods exports will double in five years. The U.K. is India’s sixth largest export market for engineering goods with a growth of 12% in 2024-2025 over the previous year. Engineering exports to the U.K. have the potential to nearly double in the next five years reaching over $ 7.5 billion by 2029-2030, they added.