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India-EU FTA to Boost Garment Exports by $4.5 Billion, Rival China

A new report forecasts that a finalized India-EU Free Trade Agreement could unlock an incremental $4 to $4.5 billion in annual ready-made garment exports for India. The deal would level the playing field against duty-free competitors like Bangladesh and Vietnam, allowing India's market share in the EU to grow from 5% to 8-9%. Crucially, it would provide a 12% duty advantage over China, the current market leader, as global brands diversify sourcing under the 'China Plus One' strategy. To seize this opportunity, Indian manufacturers must expand capacity, supported by domestic policies like PM MITRA parks and the PLI scheme.

Key Points: India-EU Trade Deal to Unlock $4.5B Garment Export Potential

  • $4-4.5B annual export boost
  • EU market share to rise from 5% to 9%
  • 12% duty advantage over China
  • Benefits from 'China Plus One' strategy
2 min read

India-EU FTA to unlock up to $4.5 billion export potential for India's RMG sector

India's RMG exports to EU could surge to $9.5B, gaining 12% duty edge over China and capitalizing on shifting global supply chains.

"The India-EU FTA is... critical to improve competitiveness of Indian RMG exporters. - CareEdge Ratings report"

New Delhi, Jan 27

India is expected to gradually increase its market share from 5 per cent to 8-9 per cent in the EU's ready-made garment imports, unlocking an incremental annual export opportunity of nearly $4-4.5 billion over the medium term, a report showed on Tuesday.

The European Union (EU) is the world's largest RMG market, with imports of nearly $84 billion (excluding trade among EU countries) in 2024, according to the report by CareEdge Ratings.

India currently exports $4.5-5 billion of RMG to the EU, holding 5 per cent share of the EU's RMG market. Unlike India, key competitors such as Bangladesh, Turkey, Vietnam, Pakistan, and Cambodia enjoy duty-free access.

"The India-EU FTA is, therefore, critical to improve competitiveness of Indian RMG exporters. The agreement is called the 'Mother of All Trade Deals' because it creates a level playing field for accessing the EU's RMG market, which is likely to reach $105 billion shortly (already at $94 billion in 11 months of CY25)," the report noted.

Once fully implemented by 2027, India will gain a 12 per cent duty advantage over China, which currently holds the largest market share of nearly 30 per cent in the EU's RMG imports, said the report.

China is expected to lose its share in the EU's RMG market due to the 'China Plus One' sourcing strategy adopted by global apparel brands and retailers.

"Additionally, socio-political uncertainties in Bangladesh may also lead apparel brands and retailers with a significant presence in the country to diversify their sourcing, thereby benefiting India, among others," the report mentioned.

To fully capitalise on this potential, Indian manufacturers must expand their capacities to meet the expected surge in demand.

India's increased competitiveness post-duty removal and continued favourable policy regimes in India, such as 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, is expected to aid the sector in becoming more cost competitive and thereby grab these additional export opportunities, said the report.

- IANS

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Reader Comments

P
Priya S
Great, but will this benefit actually reach the workers on the ground? We need to ensure fair wages and better working conditions in garment factories alongside this export push.
R
Rohit P
Finally! We've been at a disadvantage compared to Bangladesh for too long. Duty-free access will be a game-changer. Hope our manufacturers are ready to scale up quality and quantity.
S
Sarah B
The 'China Plus One' strategy is a huge opportunity. If we can build reliable, large-scale supply chains, global brands will definitely shift more orders to India. Timing is perfect.
V
Vikram M
$4.5 billion is a good start, but we should aim higher. With our raw material base and skilled workforce, we can challenge China's 30% share over the next decade. Let's go for it!
K
Kavya N
Hope this also means more focus on sustainable and ethical fashion. The EU market cares about these things. Our traditional handloom and crafts can get a big boost too! 🙏
M
Michael C
The report mentions capacity expansion as key. We need massive investment in modern machinery and technology to compete with Vietnam and Turkey on speed and consistency.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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