India is anticipated to witness a significant growth in its share of the UK’s ready-made garment (RMG) imports, projected to increase from 6 per cent in 2024 to 12 per cent in the near to medium term. This surge in market share is expected to translate into an additional annual export opportunity of approximately $1.1-$1.2 billion, as per CareEdge Ratings.
The UK, which ranks among the top five RMG markets globally, is expected to record imports worth around $20 billion in 2024, down from $24 billion in 2022. Currently, India holds a 6 per cent share of the UK’s RMG imports market. In contrast, countries such as Bangladesh, Turkiye, Cambodia, Vietnam, and Italy benefit from duty-free access, giving them a 12 per cent tariff advantage over Indian exports. However, the India-UK Free Trade Agreement (FTA) is expected to level the playing field for India, providing a competitive edge in accessing the UK’s $20 billion market.
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“Recovery in demand for RMG in the UK market, gain in market share from competing nations backed by increased competitiveness of Indian RMG exporters post duty removal and favourable policy regime in India are expected to create the incremental annual export opportunity of around $1.1-1.2 billion in the near to medium term. India’s major dependency on cotton-based textiles as against the relatively higher share of man-made fibres in the global RMG market may restrict the overall opportunities from the India-UK FTA to an extent,” said Akshay Morbiya, assistant director at CareEdge Ratings.
Despite the existing 12 per cent tariff, India has steadily increased its market share in the UK over the past four years. During this period, China, the largest RMG exporter to the UK, with $5 billion in exports in 2024, has experienced a decline in market share. The signing of the FTA with the UK enhances India’s competitiveness by creating a 12 per cent duty advantage over China. Several factors, including rising labour costs in China and the adoption of the ‘China Plus One’ strategy by global brands, have led to China’s declining dominance in the UK market. Similarly, socio-political challenges in Bangladesh, which exported $4 billion worth of RMG to the UK in 2024, are prompting global brands and retailers to diversify their sourcing, with India emerging as a viable alternative.
“With a clear 12 per cent duty advantage over China and prevailing socio-political uncertainties in Bangladesh, which together account for nearly 45 per cent of market share in UK’s RMG imports, India is expected to double its share in this market from 6 per cent in CY24 to 12 per cent in the near to medium term. The India-UK FTA holds significant potential to boost investments across the textile value chain, generate employment, particularly for women in the labour-intensive RMG sector and increase foreign exchange earnings,” said Krunal Modi, director at CareEdge Ratings.
Globally, the RMG sector holds a dominant position, with a value of $525 billion out of the total $900 billion global textile and RMG trade in 2024. Key markets such as the European Union (EU), the United States (US), the UK, Japan, Canada, and South Korea together accounted for approximately 44 per cent of global RMG imports.
In 2022, the EU and the US collectively represented nearly 40 per cent of global RMG imports. However, their market share has declined since then due to inflationary pressures and higher interest rates, which have dampened discretionary consumer spending.
Several nations, including Bangladesh, Turkiye, Cambodia, and Italy, continue to enjoy duty-free access to the UK market. Similarly, Vietnam and Pakistan benefit from duty-free access or lower tariff rates. Vietnam, in particular, has demonstrated notable gains after its FTA with the UK, effective from January 2021. Vietnam’s share in the UK’s RMG imports rose from 2.22 per cent in 2020 to 5.42 per cent in 2024.
“Vietnam has demonstrated significant gains in its share of the UK’s RMG market following the FTA with the UK. India’s overall RMG exports, which grew by 10 per cent to $16 billion in FY25, have sufficient headroom to increase RMG exports by another 10-15 per cent, given the available capacities in the sector,” added Morbiya.
With the structural advantages offered by the India-UK FTA, India’s RMG sector is poised for transformative growth, enabling the country to emerge as a key player in the global apparel market.
