India–UK Free Trade Agreement: Major Benefits for Coimbatore, Tiruppur, and Karur!
Background of the Agreement
The Free Trade Agreement (FTA) signed between India and the United Kingdom marks a new phase in the trade relationship between the two countries. Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer formalized the agreement during Modi’s visit to the UK.
This deal is expected to open up new markets for Indian agriculture, textiles, and engineering manufacturing sectors.
Key Benefits for Tamil Nadu
Major Growth for the Textile Sector
The cities of Tiruppur, Coimbatore, and Karur are major hubs for textile manufacturing and exports in India. This agreement is expected to:
- Double exports due to reduced or eliminated customs duties on textiles and ready-made garments.
- Offer tariff relief on approximately 99% of export goods.
- Bring more orders to Tamil Nadu companies, as the UK is one of the world’s leading fashion markets.
New Opportunities for Home Textile Units
Cities like Karur and Erode specialize in producing home textiles such as curtains and bed linens. These products currently account for $1.4 billion in exports, and this figure is expected to double over the next five years.
Growth Prospects in the Engineering Sector
India’s engineering exports to the UK currently stand at $4.3 billion and are expected to rise to $7.5 billion.
Coimbatore, a major engineering manufacturing hub in Tamil Nadu, produces automobile parts, valves, and machinery components. While these currently face customs duties of 7.5% to 12.5%, the FTA is likely to remove or significantly reduce these tariffs.
Note: Exporters must understand HS Codes (Harmonized System Codes), which are international product classification numbers, to plan their trade strategy effectively.
Potential Challenges for MSMEs
Concerns have been raised about possible negative impacts on Micro, Small, and Medium Enterprises (MSMEs) due to the FTA. Reasons include:
- The possibility of UK-made products entering Indian markets duty-free.
- Increased competition that may affect local manufacturing.
TACT President James stated:
“This agreement opens India’s market to the UK, but the benefits appear to favor the UK more than India.”
Future Growth and Opportunities
- Infrastructure upgrades have already begun in Tiruppur, Karur, Coimbatore, and Erode.
- New machinery, buildings, and workforce training are being implemented rapidly.
- Direct discussions between Indian manufacturers and foreign buyers (importers) are underway.
Conclusion
The India–UK Free Trade Agreement holds the potential to be a turning point for Tamil Nadu’s textile and engineering sectors. However, MSMEs must proceed with caution. Only with strategic planning can the state achieve sustainable growth, job creation, and stronger competitiveness in the global market.
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