NewKerala.com

Key Points

India's domestic readymade garment market continues strong with 8-10% revenue growth this fiscal year. The growth is fueled by economic expansion, interest rate cuts, and tax reductions that support consumer spending. However, new 50% US tariffs on Indian imports are causing significant export challenges and profitability concerns. Companies are now realigning trade toward EU, UK, and UAE markets while leveraging new free trade agreements for future growth.

Key Points: India Readymade Garment Revenue Grows 8-10% Despite US Tariffs

  • Domestic RMG growth driven by economic expansion and tax reductions
  • US 50% tariffs put India at disadvantage vs China and Bangladesh
  • Exports to US expected to drop from 33% to 20-25% share
  • Credit metrics and profitability impacted across industry players
3 min read

Domestic market for readymade garment to see steady revenue growth of 8-10 pc in FY26

India's domestic RMG market sees 8-10% growth in FY26 fueled by economic expansion, while US tariffs slash export revenues and force market realignment.

"If the tariffs hold, RMG exports to the US will see a sharp decline - Manish Gupta, Crisil Ratings"

New Delhi, Aug 26

The domestic market for readymade garment (RMG), accounting for three-fourths of the sector's revenue, will continue to see steady revenue growth of 8-10 per cent this fiscal, a report said on Tuesday.

This will be fuelled by economic growth, interest rate cuts, and tax reductions, according to a Crisil Ratings report.

"This, in turn, will cushion the tariff blow and spur overall growth at the sector level, but at a slower pace than last fiscal," Gautam Shahi, Director, Crisil Ratings.

Meanwhile, revenue growth of India’s RMG industry is set to nearly halve on-year this fiscal as the imposition of 50 per cent tariffs by the US on its imports from India becomes effective from August 27.

Credit metrics for industry participants will be impacted by that, as well as a drop in profitability. Each company will be affected differently; some receive over 40 per cent of their revenue from the US.

RMG exports totalled $16 billion last fiscal and accounted for 27 per cent of the RMG sector’s revenue, of which a third of the exports was to the US.

The 50 per cent tariff puts India at a distinct disadvantage compared with competing nations like China, Bangladesh and Vietnam, the report stated.

“If the tariffs hold, RMG exports to the US will see a sharp decline. In the first quarter of this fiscal year, total exports from India rose 10 per cent on-year to $4 billion, with exports to the US recording a 14 per cent growth during the same period. The trend is expected to sustain through 26th August till the enhanced tariffs kick in," said Manish Gupta, Deputy Chief Rating Officer, Crisil Ratings.

Post 50 per cent tariffs, Indian exports to the US may be minimal, despite the limited capacity of competing nations in value-added garments and the lead time taken by big-box retailers in the US to re-align their sourcing arrangements, Gupta added.

Overall, "we expect the share of the US in India's RMG exports to fall from 33 per cent last fiscal to 20-25 per cent this fiscal", Gupta said further.

According to the report, this would mean players will have to realign trade with other major export destinations — the European Union (EU), United Kingdom (UK) and United Arab Emirates (UAE), which together form 45 per cent of India’s exports for fiscal 2025.

The recently signed Free Trade Agreement (FTA) with the UK is also likely to result in higher exports to that country from the end of this fiscal year, providing some relief to the industry.

- IANS

Share this article:

Reader Comments

R
Rohit P
The US tariffs are really concerning. 50% is massive! Our government should negotiate better trade deals and focus on diversifying to EU and UK markets. The FTA with UK is a good step forward.
A
Anjali F
Time for Indian brands to focus more on domestic market and quality improvement. We have the talent and resources - just need better branding and marketing to compete globally. Make in India should mean quality in India! ✨
M
Michael C
Working in apparel exports, I can confirm the anxiety in the industry. Many smaller units will struggle with the US tariff impact. Hope the government provides some support measures soon.
S
Shreya B
The domestic growth story is promising but we need to address why we're losing competitive edge against Bangladesh and Vietnam. Infrastructure and ease of doing business need improvement.
K
Karthik V
This is why we need to strengthen our domestic economy. Less dependency on foreign markets = more stability. The 8-10% growth shows Indian consumers are spending confidently 💪

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

Leave a Comment

Minimum 50 characters 0/50