UK ends zero duty benefits for textile companies

The UK has suddenly suspended preferential customs duty rates on Indian textile imports. India’s textiles industry has urged the Indian government to intervene in response to the United Kingdom’s withdrawal of zero duty benefits. 

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The Indian textiles industry, with a value exceeding US$ 220 billion, has appealed to the Indian government regarding the United Kingdom’s decision to withdraw zero duty benefits. The industry has requested government intervention as both countries engage in negotiations for a free trade agreement.

Under the Developing Countries Trading Scheme (DCTS), which came into effect last week. New Delhi’s exports of home textiles and garments worth US$ 200 million to the UK. India will lose this benefit on December 31, 2025. While Bangladesh, Pakistan, and Sri Lanka will maintain their eligibility for these benefits.

“The UK has suddenly suspended preferential customs duty rates on Indian textile imports and it does not seem to be in line with the trade policy direction and when the two sides are negotiating a free trade agreement,” said a representative of the cotton textile industry.

The UK’s Generalised System of Preferences (GSP) Scheme, which previously granted a 20% concession on the overall import duty of 12% for Indian home textiles and garments, has been replaced by the Developing Countries Trading Scheme (DCTS). Under the DCTS, the concessional duty for these products is now 9.6%.

Within the Developing Countries Trading Scheme (DCTS), there are three tiers of preferences. The first tier, known as Comprehensive Preference, applies to the least developed.The second tier, Enhanced Preference, also provides zero duty benefits to certain countries. And, the Standard Preference which  includes only India and Indonesia, as they are not deemed “economically vulnerable.” Under this tier, the duty preference of 20% will be removed.