While much of the discussion around the India-EU trade deal has focused on automobiles and other headline sectors, textiles and apparel may turn out to be one of the biggest beneficiaries of the agreement.
The sector gets immediate and meaningful relief under the free trade agreement, with changes that directly improve India’s ability to compete in one of the world’s largest consumer markets.
Under the India-EU Free Trade Agreement, tariffs on Indian textiles, apparel and clothing will fall to zero from day one. Earlier, Indian textile exports to the European Union faced duties of up to 12%.
This tariff disadvantage had long hurt India’s competitiveness against rivals such as Bangladesh, Pakistan and Turkey, which already enjoyed lower or zero-duty access.
“The textile chapter of the India-EU FTA corrects a long-standing asymmetry in market access that has constrained India’s most employment-intensive export sector. Indian textile and apparel exports currently attract EU tariffs of up to 12%, while competing suppliers benefit from preferential regimes under EU trade agreements,” said Jidesh Kumar, Managing Partner, King Stubb & Kasiva, Advocates and Attorneys.
“A rules-based tariff elimination under the FTA would not only restore competitive neutrality but also provide long-term legal certainty to investors and global buyers,” he added.
The removal of duties across all textile and apparel tariff lines opens India’s path to the EU’s textile and apparel import market, which is valued at $263.5 billion. The European Union is already India’s second-largest export destination for textiles and apparel, after the United States, but India’s share in the EU market has remained limited so far.
A LARGE GAP, AND A BIG OPPORTUNITY
India currently exports about $7 to 7.2 billion worth of textiles and apparel to the EU. This is a small share of the EU’s overall textile imports, highlighting the scale of the opportunity the trade deal opens up.
Textile sector benefits in India-EU FTA
“Bangladesh captured a $30 billion share of the EU textile market largely because it had zero duties. With the India–EU FTA, India can now compete and win,” Goyal said.
Ready-made garments already form the largest share of India’s textile exports to the EU, accounting for around 60%. Cotton textiles follow with about 17%, while man-made fibre products account for roughly 12%
Handicrafts, carpets, jute, woollen, handloom and silk products make up the rest, reflecting the labour-intensive and MSME-driven nature of the sector.
JOBS, MSMES AND REGIONAL CLUSTERS
The textile sector employs around 45 million people directly in India. Better access to the EU market is expected to boost production, improve capacity utilisation and support employment across MSME clusters.
India’s textile exports to the EU already originate from 342 districts across the country. Major ready-made garment hubs include Tiruppur, Bengaluru and Gurugram-Faridabad.
Cotton textiles and home furnishings are anchored in Karur, Panipat and Ahmedabad, while man-made fibre and synthetic textiles are led by Surat, Dadra and Nagar Haveli and Mumbai.
