India Set to Double Share in UK’s RMG Market: CareEdge

India’s readymade garments (RMG) sector is poised for a significant leap, with CareEdge Ratings forecasting a doubling of India’s market share in the UK’s RMG imports from the current 6% to 12% in the near to medium term. This surge is expected to unlock an additional annual export potential of approximately US$1.1–1.2 billion.

The UK RMG market, valued at around US$20 billion in 2024 (down from US$24 billion in 2022), ranks among the top five global importers. Despite facing a 12% tariff disadvantage in comparison to countries like Bangladesh, Turkey, Cambodia, Vietnam, and Italy, India has been steadily gaining ground. The recently concluded India-UK Free Trade Agreement (FTA) is set to eliminate this disparity, offering Indian exporters duty-free access and a level playing field.

According to Akshay Morbiya, Assistant Director at CareEdge Ratings, the recovery in UK’s RMG demand, coupled with India’s enhanced competitiveness post-duty removal and supportive domestic policies, will help Indian exporters tap into this market potential. However, India’s strong reliance on cotton-based textiles, in contrast to the global preference for man-made fibres, may limit the full extent of gains from the FTA.

Notably, India had managed to increase its market share in the UK over the past four years even with a 12% duty burden, while China lost market share. With the FTA in effect, India now enjoys a 12% duty advantage over China, which exported US$5 billion worth of RMG to the UK in 2024. China’s competitiveness is declining due to rising labor costs and the growing popularity of the "China Plus One" sourcing strategy.

Political and economic uncertainties in Bangladesh, a major RMG exporter with US$4 billion in exports to the UK, may also prompt international brands to diversify sourcing towards India. This shift could further support India’s export ambitions.

Krunal Modi, Director at CareEdge Ratings, emphasized that India’s anticipated rise to a 12% market share will boost investment in the country’s textile value chain, increase employment—particularly for women—and strengthen foreign exchange earnings.

In 2024, the global textile and RMG trade stood at US$900 billion, with the RMG segment accounting for about US$525 billion. Key markets included the EU, USA, UK, Japan, Canada, and South Korea, which together made up nearly 44% of global imports.

Due to inflation and high interest rates, the share of EU and USA in global RMG imports has declined in recent years. Meanwhile, countries like Vietnam have seen gains—thanks to FTAs. Vietnam, for example, saw its UK market share increase from 2.22% in 2020 to 5.42% in 2024 following its FTA with the UK.

Morbiya concluded that India, with RMG exports reaching US$16 billion in FY25, still has 10–15% growth potential, supported by existing manufacturing capacities and favorable trade developments.