Transform Trade response to the announcement of a UK-India Free Trade Agreement

45 million people work in the garment industry in India - with the UK being one of its top five export destinations.
Image: Unsplash

The UK and India concluded their first ever Free Trade Agreement (FTA) on the 6th May. Transform Trade are concerned that the impacts for garment workers in India and the wider region have not been properly considered.  

Textiles and clothing is India’s largest manufacturing sector, and the UK is one of its top five export destinations. The Indian industry has viewed negotiations with the UK as a way to increase its competitiveness compared with both China and smaller garment producing countries in the region such as Bangladesh and Cambodia.  

Whilst these changes are likely to bring benefits to the industry overall, there is little to ensure that they are passed on to India's approximately 45 million garment workers. Transform Trade’s forthcoming report, based on interviews with 198 garment manufacturers in India, shows that UK brands continue to use practices that make it hard for them to cover their costs, including wages. These practices include not adjusting prices for increases in the minimum wage, and changing orders at the last minute without increasing lead times or the amount to be paid for the order. Some manufacturers have been fined for late delivery even when the delays were caused by brands.   

It is therefore concerning that the UK has touted the benefits of cheaper clothes for UK consumers in its announcement. This is because the evidence suggests that tariff reductions will benefit UK brands and consumers, with nothing to ensure workers will benefit. 

The FTA contains a labour clause that could help ensure better outcomes for workers. However it is non-binding. This means that there is nothing to require businesses to ensure they conduct their operations in a way that doesn’t increase pressure down the supply chain and drive poor labour conditions.  

In addition, very little consideration appears to have been given to the impacts of this deal on other countries that rely on UK supply chains. Countries like Bangladesh, Cambodia and Sri Lanka are India’s competitors in the textiles and garments sector and are even more reliant on the industry. They are already reeling from Donald Trump’s imposition of a 10% tariff for exports to the US and fear a further hike in July.

Concerns have been raised that the UK-India deal could divert trade away from these countries and towards India as the latter becomes a more attractive source country. This could mean job losses for workers in impacted countries, or even more pressure to reduce wages and cut corners. 

Transform Trade are calling on the UK to introduce regulation, in the form of a Fashion Watchdog, to stop brands from using these unfair practices in their supply chains. The Grocery Code Adjudicator has already demonstrated the effectiveness of such regulation. Without this, the trade deal will just be another way that brands get richer on the backs of workers in their supply chains.