Rerouted, not rebuilt: How geopolitics redrew Middle East apparel trade

Between CY21 and CY24, regional apparel imports grew 24.5%, compared with export growth of just 6.0%. As demand for apparel across the Middle East expanded, buyers increasingly sourced from outside the region. The share of regional apparel imports sourced from within the Middle East declined every year, from 11.9% in CY21 to 9.2% in CY24, even as regional exporters increased their sales to neighbouring markets. Regional manufacturers sold more within the region but captured a smaller share of its growing import demand.

The Gulf also plays a distinct role in the region's apparel trade. The UAE accounts for 15.1% of regional apparel exports, largely reflecting its role as a re-export hub rather than a manufacturing centre, with 74% of its apparel exports destined for neighbouring markets. Garment manufacturing remains concentrated in Türkiye, Egypt and Jordan, while the UAE and Saudi Arabia are major centres of apparel demand and purchasing power.

A series of shocks moved trade routes more than trade volumes

Between CY23 and CY25, the region's apparel trade absorbed a sequence of freight, demand and political shocks, each affecting a different part of the supply chain. The Red Sea closure from November 2023 cut Suez container transits by 75%, pushed container rates up by around 130% and added roughly ten days each way for shipments rerouted around the Cape. The February 2023 earthquakes in Türkiye were a contributing factor rather than a primary cause, as the affected provinces held 45% of textile capacity but only 2.6% of apparel exports.

In CY23, the destocking cycle of Eurpoe produced the only outright contraction in the series, a 5.7% fall in regional exports, even as Gulf consumption continued to grow. Political ruptures added a further layer of disruption in CY24. After Türkiye suspended all trade with Israel on 2 May 2024, Israel's apparel imports from the region fell from US$ 286M to US$ 123M within a year, and the share it sourced from within the region dropped from 12.7% to 4.7%.

The most consequential shift came in April 2025, when U.S. reciprocal tariffs set the rate for Egypt and Türkiye at 10%, compared with 46% for Vietnam, 49% for Cambodia, 37% for Bangladesh and 34% for China. This gave the two countries an advantage of 24 to 39 percentage points within a single quarter, on top of the duty-free U.S. access that Egypt and Jordan already hold through QIZ status. For a region whose apparel proposition has long rested on proximity to its buyers, a single tariff announcement shifted competitive positions further in three months than three years of shipping disruption had.

Across all of these shocks, however, the region's overall trade held firm, with exports steady at around US$ 27B and imports still rising. What shifted was the direction of trade, as the intra-regional share of exports climbed every year from 18.6% to 20.4%, helped in part by the UAE's trade agreements with India, Türkiye and Indonesia.

Exhibit 2: Change in apparel export of Türkiye and Egypt, CY21-CY25

Türkiye still anchors the region, but its cost advantage is eroding

The region's apparel surplus rests almost entirely on Türkiye, which makes the country's trajectory central to the region's overall position. The remaining eleven reporting countries together run a combined deficit of roughly US$ 5B, a figure that has remained broadly stable since CY21. Türkiye's own net surplus, meanwhile, narrowed from US$ 13.4B to US$ 11.2B over the same period, a decline larger than that of the region as a whole.

The factors behind Türkiye's decline appear to be more monetary than geopolitical, rooted in the rising cost of producing in the country rather than in the conflicts around it. From 2023, the disinflation programme kept the Lira strong in real terms, while the minimum wage roughly doubled to around US$ 1,000 a month, making Turkish production considerably more expensive. The impact was visible in trade flows, with Türkiye's apparel imports rising by 30% while its exports fell by around 10%. The nearshoring premium the country earned during the 2021-22 container crisis, when buyers valued proximity over price, faded once freight rates normalised and unit cost again became the deciding factor.

Rising costs in Türkiye set off a shift in production across the region, beginning with orders, which buyers can re-place within a single season. Between CY21 and CY24, Egypt increased its exports to markets outside the region by 27.5% and Jordan by 32.6%, while exports from Türkiye declined 4.5% and those from Israel 11.4%. Capital followed within months, with around 200 Turkish textile companies establishing operations in Egypt, where the Turkish industry's own association estimates production costs at roughly a quarter of Türkiye's. Employment adjusted next, as Türkiye's garment and textile workforce fell from 1.25M to 0.95M in two years on the back of a rising wage floor.

Exhibit 3: Apparel wage floors and export performance across the region

India's position weakened even as the market it serves grew

India's apparel exports to the Middle East declined from US$ 2.69B in CY21 to US$ 2.16B in CY25, a fall of 19.4%, reaching a low in CY23 before a partial recovery. The relative picture is even more telling: between CY21 and CY24, apparel imports into the region from outside it grew 28.4%, while India's shipments into the same markets fell 26.2%, reducing India's share from 18% to 10%.

Much of this decline was concentrated in the UAE, where India's shipments fell from US$ 1.92B to US$ 1.36B. The India-UAE CEPA, which entered into force in May 2022, removed the 5% duty on Indian apparel, yet shipments dropped 34.2% in its first year even as UAE apparel imports grew 34.6%. Over the two years after the duty was removed, India's share of UAE apparel imports roughly halved, from about 39% to about 17%.

The UAE experience offers an important lesson for Indian exporters, as a five-point tariff preference could not hold share against a landed-cost gap several times larger. Trade agreements can strengthen an existing cost advantage, but they cannot create one on their own. As regional buyers continue to diversify their sourcing, the question is increasingly whether Indian manufacturers can compete on delivered cost in the categories and markets where demand is growing.

Exhibit 4: India's apparel exports to the Middle East by destination

The next step: Competing on landed cost

The region continues to offer significant headroom for Indian exporters, with demand still growing and India's own shipments already recovering from their CY23 low. Türkiye, long the region's factory, has become the fastest-growing destination for Indian apparel, with shipments up 352% since CY21, and with Turkish apparel imports rising 30% as the country shifts from producer to buyer, that momentum has room to build. Saudi Arabia presents a sizeable opportunity of its own, with a market expanding on the back of population and income growth and ample space for Indian suppliers to establish a stronger presence. Both markets reward suppliers who can compete on delivered cost, which places the opportunity firmly within reach of exporters who get their cost position right.

Indian manufacturers that move early are well placed to capture this growth. The strongest positions will be built by those who identify the categories where they can lead on delivered cost, deepen relationships with buyers who are rebalancing away from Chinese and Bangladeshi supply, and get ahead of the documentation requirements expected under European rules in 2027, turning compliance readiness into a competitive edge.

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At Praxis, we work with apparel businesses on the choices that shape growth and performance, from which markets and customer segments to prioritise and how to price competitively, to building the capabilities that win and retain orders. As trade patterns continue to shift, we partner with management teams from diagnosis through to execution to help turn that change into advantage.

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 In the next edition, we'll explore how Indian textile firms can navigate increasingly uncertain demand.