India is set to boost its market share in the European Union’s ready-made garment (RMG) imports from 5% to 8-9%, creating an additional export opportunity of around $4-4.5 billion annually. The EU stands as the world’s largest RMG market, with imports totaling nearly $84 billion in 2024, excluding intra-EU trade. Currently, India exports $4.5-5 billion worth of RMG to the EU, holding a 5% share in the market.
The India-EU Free Trade Agreement (FTA) plays a crucial role in enhancing the competitiveness of Indian RMG exporters, aiming to level the playing field for market access. This agreement, dubbed the ‘Mother of All Trade Deals,’ is anticipated to facilitate access to the EU’s RMG market, which is projected to reach $105 billion soon.
By 2027, once fully implemented, India is expected to gain a 12% duty advantage over China, the current leader with a market share of nearly 30% in the EU’s RMG imports. China’s market share in the EU is predicted to decline due to the ‘China Plus One’ sourcing strategy embraced by global apparel brands and retailers.
The report also highlights potential shifts in the sourcing landscape due to socio-political uncertainties in Bangladesh, which could prompt diversification in sourcing destinations, benefiting countries like India. To harness this potential, Indian manufacturers need to expand their capacities to meet the anticipated rise in demand.
India’s enhanced competitiveness post-duty removal, along with favorable policy frameworks like the removal of 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 enable it to seize additional export opportunities.
