Will the FTA Really Double India's Market Share in the UK's Garment Imports?

Mumbai, May 8 (NationPress) - Following the free trade agreement, India is poised to enhance its market share in the UK's ready-made garment imports from 6 percent to 12 percent, leading to an estimated annual export boost of approximately $1.1-1.2 billion in the near to medium term, as highlighted in a report by CareEdge Ratings released on Thursday.

The UK ranks among the top five markets for ready-made garments (RMG), with imports projected to reach around $20 billion in 2024. Currently, India's share stands at 6 percent, while competitors like Bangladesh, Turkey, Cambodia, Vietnam, and Italy benefit from duty-free access, granting them a 12 percent tariff advantage over India.

The India-UK FTA represents a transformative opportunity for India's RMG sector, establishing a more equitable playing field against key rivals in accessing the nearly $20 billion UK RMG market, according to the report.

Despite the existing 12 percent tariff, India has gradually increased its market presence in the UK over the past four years, while China has seen a decline during this period.

With the FTA's signing, India now enjoys a clear 12 percent duty edge over China, which remains the largest RMG exporter to the UK, with exports expected to reach $5 billion in 2024. China's market share has diminished recently, and it's anticipated to continue decreasing in the UK RMG market due to its waning competitiveness, driven by rising labor costs and the 'China Plus One' sourcing strategy adopted by global apparel brands and retailers, as per the report.

Additionally, socio-political instability in Bangladesh, which exported RMG valued at approximately $4 billion to the UK in 2024, may urge apparel brands and retailers with significant operations in Bangladesh to diversify their sourcing to include India.

Krunal Modi, Director at CareEdge Ratings, stated: "With a distinct 12 percent duty advantage over China and ongoing socio-political uncertainties in Bangladesh—both accounting for nearly 45 percent of the UK's RMG imports—India is set to double its market share from 6 percent to 12 percent in the near to medium term. The India-UK FTA has substantial potential to enhance investments throughout the textile sector, create job opportunities particularly for women in the labor-intensive RMG industry, and boost foreign exchange earnings."

The RMG sector accounts for a significant portion of the global textile and RMG trade, which was valued at approximately $900 billion in 2024, with the RMG industry alone contributing about $525 billion. Major markets include the European Union, USA, UK, Japan, Canada, and South Korea, which collectively represented nearly 44 percent of global imports in 2024.