EU-India FTA Provides Cushion To Textiles & Apparel Sector

European Commission President Ursula von der Leyen announced on X that "India and the EU are making history today".

The historic FTA opens up new market opportunities for various Indian industries, most significantly for the textiles and apparel sector. It is a decisive moment for exporters to explore larger markets for yarn, cotton yarn, man-made fibre apparel, ready-made garments, men’s and women’s clothing, and home textiles, among others. 

As both sides have been grappling with the high tariffs imposed by the US, disrupting the global trade flow, the India-EU FTA is expected to provide a fillip to exporters, as it could aid in diversifying the trade portfolio. According to official sources, the agreement will provide a cushion for exporters (particularly in the textiles and apparel sector) amid global disruptions, as the EU will eliminate import duty on over 90% of Indian goods. 

In 2024–25, India’s bilateral trade in goods with the EU stood at ₹11.5 lakh crore ($136.54 billion).

In 2024, India exported about $7.01 billion worth of textiles, apparel, and home textiles to the EU, up from $6.76 billion in 2019.

Projected Growth Rate

Industry projections estimate that the Indian apparel exports could grow by 20%–25% year-on-year after the operationalisation of the FTA, as against the current growth rate of 3.01% in the EU market.  

Speaking on this historic deal, A. Sakthivel, Chairman, Apparel Export Promotion Council (AEPC), highlighted that the industry sentiments were upbeat after the successful conclusion of the India–EU deal. 

This deal will provide a significant boost to apparel exports, which are expected to double in the next three years. The zero-duty access of Indian garments and clothing to the EU market will decisively turn the tables in India’s favour, enhancing our competitiveness in the European market

— A. Sakthivel, Chairman, AEPC

The EU-India FTA will also enhance the global competitiveness of Indian entities, in terms of quality, design, and sustainability aspects. 

The EU is the world's largest apparel importer, accounting for roughly 35.5% of global clothing and textile imports in 2022, with import values exceeding $200 billion annually.

In a statement, Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII), said that the landmark agreement deepens the partnership between the two major economies, which together account for nearly 25% of the global GDP.

It [the FTA] decisively improves competitiveness in the EU’s high-value market, anchors Indian manufacturers and service providers deeper into global value chains, and accelerates investment, technology inflows, and scale. Key sectors of focus include textiles and apparel, leather and footwear, gems and jewellery, marine products, engineering goods, automobiles, agriculture and processed foods, IT and IT-enabled services, and other business and professional services

Chandrajit Banerjee, Director General, CII

The zero duty access in textiles and clothing (covering all tariff lines and reducing tariffs by up to 12%) would materialise into market opportunities for India's textiles and apparel sector, enabling MSMEs to scale production and generate employment, besides tapping into the maximum potential of the EU's ₹22.9 lakh crore ($263.5 billion) import market. 

"Some of the major garment-importing countries of the EU, such as Germany, France, Spain, and Italy, source substantially from India, and this deal will further boost our apparel exports to these economies," Dr. Sakthivel pointed out.