India is anticipated to quadruple its market share in the UK’s RMG imports from 6 per cent in CY24 to 12 per cent in the near to medium term, which translates into an additional yearly export opportunity of about US $ 1.1–1.2 billion, according to CareEdge Ratings.
With imports of about US $ 20 billion in CY24 (compared to US $ 24 billion in CY22), the UK is one of the top five RMG markets. While Bangladesh, Turkey, Cambodia, Vietnam, and Italy have duty-free access and a 12 per cent tariff advantage over India, India currently accounts for 6 per cent of the UK’s RMG import market. The India-UK FTA is a game-changer for India’s RMG industry, levelling the playing field with major rival countries for entry into the UK’s almost US $ 20 billion RMG market.
China has lost some market share in the UK during the last four years, but India has steadily increased its market share despite the imposition of a 12 per cent tax. India now enjoys a 12 per cent duty advantage over China, the UK’s top RMG exporter with US $ 5 billion in CY24 exports, thanks to the signing of the free trade agreement with the UK.
China’s diminishing competitiveness, supported by rising labour costs and the “China Plus One” sourcing strategy used by international clothing companies and retailers, has caused it to lose market share in recent years and is predicted to continue to do so in the UK’s RMG industry.
Clothing brands and retailers with a large presence in Bangladesh may diversify their sourcing, among other things, to India as a result of sociopolitical unrest in the country, which exported RMG worth almost US $ 4 billion to the UK in CY24.
With a distinct 12 per cent duty advantage over China and the sociopolitical unpredictability in Bangladesh, which together account for almost 45 per cent of the market share in UK RMG imports, India is predicted to double its share in this market from 6 per cent in CY24 to 12 per cent in the near to medium term, according to Krunal Modi, Director at CareEdge Ratings. The India-UK free trade agreement has the potential to significantly enhance foreign exchange revenues, create jobs, especially for women in the labour-intensive RMG industry, and stimulate investments throughout the textile value chain.
Vietnam and Pakistan benefit from duty-free entry or a reduced tariff rate, while Bangladesh, Turkey, Cambodia, and Italy have duty-free access to the UK market. Vietnam’s proportion of UK RMG imports rose from 2.22 per cent in CY20 to 5.42 per cent in CY24 after the Vietnam-UK Free Trade Agreement went into force on 1st January 2021.
