How will the India-EU FTA unlock $4.5 billion for India’s RMG sector?
Synopsis
India's ready-made garment sector is set to experience a significant boost, with expectations to increase its EU market share and unlock an impressive $4.5 billion in export potential. This report delves into the critical role of the India-EU FTA in enhancing competitiveness and meeting future demand.
Key Takeaways
India's market share in EU RMG imports is set to rise.
The potential export opportunity is $4-4.5 billion.
The India-EU FTA is crucial for competitiveness.
China is expected to lose market share due to diversification strategies.
Indian manufacturers must scale up to meet demand.
New Delhi, Jan 27 (NationPress) India is poised to gradually expand its market share in the EU's ready-made garment (RMG) imports from 5 percent to an estimated 8-9 percent, unlocking an additional annual export potential of approximately $4-4.5 billion over the medium term, according to a report released on Tuesday.
The European Union (EU) represents the largest RMG market globally, with imports totaling nearly $84 billion (excluding intra-EU trade) in 2024, as per a report by CareEdge Ratings.
Currently, India exports between $4.5-5 billion of RMG to the EU, holding a 5 percent share of the market. Unlike India, major competitors like Bangladesh, Turkey, Vietnam, Pakistan, and Cambodia have duty-free access.
“The India-EU FTA is crucial for enhancing the competitiveness of Indian RMG exporters. This agreement is often referred to as the ‘Mother of All Trade Deals’ because it establishes a level playing field for accessing the EU's RMG market, projected to reach $105 billion soon (currently at $94 billion within 11 months of CY25),” the report highlighted.
Once fully executed by 2027, India is anticipated to achieve a 12 percent duty advantage over China, which currently dominates the EU's RMG imports with nearly 30 percent market share, the report added.
China is expected to see a decline in its EU RMG market share due to the ‘China Plus One’ sourcing strategy adopted by global apparel brands and retailers.
“Furthermore, socio-political instabilities in Bangladesh may prompt apparel brands and retailers, heavily invested in the country, to diversify their sourcing, which would potentially benefit India, among others,” the report stated.
To fully leverage this opportunity, Indian manufacturers will need to scale up their capacities in anticipation of the expected growth in demand.
India's enhanced competitiveness following duty exemptions and favorable policy initiatives such as the removal of the Quality Control Order (QCO) on polyester yarn, the PM Mega Integrated Textile Region and Apparel (PM MITRA) park, and the Production Linked Incentive (PLI) scheme, are expected to bolster the sector's cost competitiveness and allow it to seize these new export opportunities, the report concluded.
Point of View
We recognize the transformative potential of the India-EU FTA for the ready-made garment sector. This agreement not only positions India favorably against competitors but also paves the way for increased exports, economic growth, and job creation. The proactive steps taken by Indian manufacturers to enhance capacity and competitiveness are commendable and crucial for seizing this opportunity.
NationPress
8 May 2026
Frequently Asked Questions
What is the projected increase in India's EU market share for RMG?
India is expected to increase its EU market share for ready-made garments from 5 percent to 8-9 percent.
How much export potential does the India-EU FTA unlock?
The India-EU FTA is projected to unlock an annual export potential of approximately $4-4.5 billion.
What advantages does the FTA provide for Indian RMG exporters?
The FTA will enhance the competitiveness of Indian RMG exporters by creating a level playing field and offering duty advantages.
What is the significance of the EU market for RMG?
The EU is the largest RMG market globally, with imports estimated at nearly $84 billion in 2024.
Which countries are India's main competitors in the RMG market?
Key competitors include Bangladesh, Turkey, Vietnam, Pakistan, and Cambodia, all of which enjoy duty-free access.
