Pearl Global Industries Ltd. expects the recently signed India-UK Free Trade Agreement to significantly contribute to its revenue growth, driven by reduced costs.

In a conversation with NDTV Profit on Thursday, Pearl Global Managing Director Pallab Banerjee expressed optimism, projecting a two-time growth in revenue from the UK market following the FTA.  

Historically, the garment manufacturing company has generated over Rs 250 crore annually from the UK market. The UK market has been contributing around 6–7% of Pear Global’s total business, according to Banerjee.

“The UK market will probably become 2x or 3x immediately in the next one to two years. Historically, the share of revenue from the UK has been 6% to 7% of our total business.

“How this percentage will shift depends on the other markets as well. The advantage of 10% to 12% duty, depending on which product we are shipping, comes in our favour,” he told NDTV Profit.

While the FTA would contribute to the company’s growth, it will also boost the apparel manufacturing sector in India, Banerjee said. Apart from the UK market, the company is also looking forward to significant contributions to its revenue from other major markets like the US.

“We are looking forward to doubling the kind of UK share that we have at this point in time. And that’s primarily from exports from India and Bangladesh. You also have to keep in mind that our total sales happen across many other regions,” Banerjee said.

“The US is a bigger market. Similarly, Japan and Spain are bigger markets than the UK. So, naturally, what we see is that we will experience growth in the overseas sales as well,” he added.

India and the UK recently signed an FTA to deepen trade relations between the two countries. Before the FTA, Indian garment exports faced up to 12% duties in the UK. The FTA has eliminated this, making Indian exports more competitive globally.

“Products, which had a cost inhibition factor from India, now become much more competitive,” he said.

“With this FTA, India comes into the same playing field as some of the other countries like Bangladesh, Cambodia, Vietnam and Turkey. All these countries had this advantage, which India did not have,” he said.

He noted that nearly 50% of the UK’s apparel imports come from three countries: China, Bangladesh and Turkey. While China contributes over 20%, Bangladesh contributes around 17% to 18%. Turkey accounts for about 8% to 9% of the imports by the UK.

“Most of the Western economies are taking actions to decouple from China. That gave rise to China Plus One and it has accelerated with President Trump coming into his second term. If that continues, I think that’s a major gain that would happen,” Banerjee added. 

He highlighted that the company made significant investments in its UK business for a long time. It has doubled its manufacturing capacity in India in the last one to two years and is now in a good position to take advantage of the global push to de-risk and decouple from China and Bangladesh, he added.

When asked about how the political tumult in Bangladesh will affect its garment exports from the country to the UK, he said Bangladesh has duty-free access to the UK due to its least-developed-country status and that it will continue till 2029.

It will be difficult for the UK to decouple from Bangladesh. Instead, it will opt to “de-risk”, he said. “I don’t have to decrease my Bangladesh share to gain my India share.”

Banerjee said Pearl Global Industries has factories in several other countries such as Vietnam, Bangladesh, Indonesia and Guatemala. In terms of share of exports, markets such as the US, Japan and Spain are bigger than the UK market, he said.

. Read more on Business by NDTV Profit.While the FTA will contribute to the company’s growth, it will also boost the apparel manufacturing sector in India, says MD Pallab Banerjee.  Read MoreBusiness, Notifications 

​NDTV Profit