India is expected to double its proportion in the UK's ready-made garments (RMG) imports from the existing 6% to 12% due to the India-UK Free Trade Agreement (FTA), a report by CareEdge Ratings published on Thursday stated.
This transition would unlock an incremental annual export opportunity of around $1.1–1.2 billion in the near to medium term.
The UK is one of the world’s top five markets for RMG, with imports projected to total around $20 billion in 2024. Currently, India’s 6% share in this market lags behind competitors such as Bangladesh, Turkey, Cambodia, Vietnam, and Italy — all of which enjoy duty-free access and a 12% tariff advantage over Indian exports.
Yet, the new FTA signed by India and the UK is a game-changer for India's RMG industry, in effect eradicating this tariff disadvantage and creating a level playing field with major competitors, the report adds.
Despite having been at a 12% tariff disadvantage until now, India has been able to incrementally boost its share in the UK market in the last four years while China's share lost out over the same period.
The deal provides India with a fresh 12% duty benefit compared to China, the highest RMG exporter to the UK with exports worth $5 billion in 2024. China will continue to lose market share because of increasing labour costs and a worldwide migration towards a "China Plus One" strategy of sourcing by top fashion brands and retailers.
Simultaneously, consistent socio-political unrest in Bangladesh — which shipped approximately $4 billion worth of RMG to the UK this year — might encourage worldwide brands that are highly dependent on the nation to shift their source base, which could boost India's participation.
Krunal Modi, Director at CareEdge Ratings, said:
"While having a distinct 12 per cent duty benefit over China and ruling socio-political volatilities in Bangladesh, which together share close to 45 per cent of UK's RMG import market share, India is poised to double its market share from 6 per cent in 2024 to 12 per cent in the short to medium term. The FTA between India and the UK has strong potential to increase investments through the value chain in textiles, create jobs, especially for women in the labor-intensive RMG segment and add foreign exchange earnings."
Globally, the RMG sector constitutes a significant percentage of the world's total textile and apparel business, adding around $525 billion towards a total market valued at $900 billion in 2024. The European Union, the United States, the United Kingdom, Japan, Canada, and South Korea are the major importers, together representing around 44% of imports worldwide.
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