Exploring New Horizons of Trade Opportunities to UK and EU Amid Rising US Tariff Pressures

India's textile and leather industries are facing significant challenges due to recent steep tariffs imposed by the United States, placing thousands of exporters and workers in a precarious situation. The impact of the US tariffs, the potential risks for other sectors, and the opportunities for Indian exporters to diversify into the European Union (EU) and United Kingdom (UK) markets are examined, highlighting ways to sustain and grow trade.

Impact of US Tariffs on India's Textile and Leather Sectors

The United States has raised tariffs on many Indian exports, including textiles and leather goods, to as high as 50%. This measure came into effect in August 2025 and is a result of geopolitical concerns beyond trade alone. The textiles sector, which is one of India's largest exporters and provides direct employment to approximately 45 million people, now faces a severe disadvantage as competitors like Bangladesh and Vietnam face much lower tariffs of around 20%. Indian exporters report canceled orders, halted shipments, and significant financial losses, with estimates suggesting a loss of $4-5 billion in export revenue due to reductions in US-bound apparel orders.

Similarly, the leather industry, which relies on exports for around 80% of its business, is seeing orders canceled and clients shifting to competitors in Bangladesh, Vietnam, and Pakistan. Exporters warn that the increased costs due to tariffs will likely lead to factory closures, job losses, and wage payment difficulties for workers. These tariff hikes threaten to disrupt the livelihoods of millions employed directly or indirectly in these sectors.

Sectors at Risk Beyond Textiles and Leather

Aside from textiles and leather, other export-reliant sectors like engineering, gems and jewelry, and certain consumer products also face risks. The US accounts for nearly $87 billion of India’s overall merchandise exports, impacting approximately 55% of goods shipped to the US. This broadly affects many small and medium enterprises (SMEs) that operate in these export chains and rely heavily on US markets. The increased tariffs reduce competitiveness compared to countries with preferential access or lower trade barriers, potentially leading to broader economic consequences including slower GDP growth.

Opportunities for Diversification: EU and UK Markets

To mitigate these losses and reduce dependency on the US market, Indian exporters can actively explore and expand trade relations with the European Union and the United Kingdom.

1. Advantageous India-UK Free Trade Agreement (FTA)

India and the UK recently implemented a Free Trade Agreement (FTA) that offers duty-free access to approximately 99% of Indian textile and leather exports into the UK market. This eliminates a previous tariff disadvantage of up to 12%, significantly improving India’s cost competitiveness compared to other Asian exporters. For example, tariffs on cotton T-shirts, ready-made garments, synthetic fabrics, and denim apparel are now zero, providing Indian manufacturers and exporters a major edge.

This FTA is expected to increase Indian textile exports to the UK substantially, with specific manufacturing hubs like Tirupur (Tamil Nadu), Panipat (Haryana), and Agra (Uttar Pradesh) poised for growth. The agreement also opens doors to collaborations with UK retailers and brands, enhancing market access, boosting investments, and generating employment in key regions known for textiles and leather goods 

2. Expanding to the European Union

The EU remains a crucial market for Indian exports. While tariffs vary by product, ongoing talks and trade facilitation measures aim to enhance access for textiles and leather goods. Indian exporters stand to gain by focusing on quality, compliance with EU standards, and sustainability certifications, which are increasingly demanded by European consumers. Growing consumer awareness about ethically produced goods gives India’s artisanal and traditional clusters an opportunity to cater to niche markets within the EU.

Exporters can leverage the EU’s large import market and build relationships with distributors and brands seeking diverse sourcing options. Although tariff rates are generally lower than current US tariffs, exporters must also address regulatory standards and logistics efficiently to fully utilize these markets.

Strategic Steps for Indian Exporters

To secure trade and grow exports in the EU and UK while countering challenges posed by US tariffs, Indian exporters can consider the following strategies:

• Enhance Quality and Compliance: Meeting international standards related to product quality, labor practices, and environmental sustainability will increase acceptance and preference in EU and UK markets.

• Focus on Value-Added Products: Developing higher value and differentiated products can command premium prices and customer loyalty abroad.

• Diversify Market Portfolio: Reducing dependency on a single market by exploring multiple export destinations minimizes risks associated with geopolitical or trade policy shifts.

• Build Partnerships: Collaborating with foreign retailers, brands, and distributors can improve market penetration and ensure steady orders.

• Strengthen Supply Chains: Investing in better supply chain management, faster delivery, and compliance certifications will enhance competitiveness.

• Support from Government and Trade Bodies: Utilizing schemes and trade facilitation support from Indian government agencies, including MSME-focused programs, export promotion councils, and trade delegations can provide critical technical and financial assistance.

  
  

Conclusion

The recent US tariff hikes present serious challenges to India’s textile and leather export sectors, risking job losses and financial difficulties. However, emerging opportunities in the UK and EU markets, bolstered by trade agreements and growing demand for Indian products, provide a pathway for Indian exporters to diversify and recover. Through a combination of quality improvements, market diversification, and strategic partnerships, India’s textile and leather industries can navigate the current trade disruptions, sustain employment, and achieve long-term growth.

This evolving trade landscape highlights the importance of flexibility and global engagement for Indian exporters in maintaining their vital role in the economy and securing better futures for millions of workers.