The newly signed India–European Union Free Trade Agreement (FTA) marks a decisive shift in India’s textile trade trajectory, one that moves beyond incremental export growth toward structural competitiveness. By offering zero-duty access across all textile and apparel tariff lines, the agreement removes duties of up to 12 per cent, unlocking the EU’s vast $263.5 billion textile and apparel import market for Indian exporters.
For an industry that already contributes ₹3.19 lakh crore (~$36.7 billion) to India’s global exports, with ₹62.7 thousand crore (~$7.2 billion) directed to the EU, this agreement is less about market entry and more about market expansion, especially for MSME-led, labour-intensive segments.
Correcting a Long-Standing Disadvantage
For years, Indian textile exporters have faced a tariff handicap compared to competitors like Bangladesh, Pakistan, and Türkiye, many of whom enjoyed preferential access to the EU. The FTA decisively corrects this imbalance. With tariff parity restored, India can now compete on quality, scale, reliability, and sustainability, areas where it already holds strategic advantages.
MSMEs at the Centre of Growth
India’s textile exports to the EU are notably diversified and MSME-driven. Ready-Made Garments account for nearly 60 per cent of exports, followed by cotton textiles (17 per cent) and man-made fibre textiles (12 per cent). Smaller but critical segments, handicrafts, carpets, jute, handloom, wool and silk, underscore the sector’s artisanal depth and employment intensity.
With the EU being India’s second-largest textile export destination, improved access is expected to drive higher capacity utilisation across clusters, enabling MSMEs to scale operations, formalise supply chains, and integrate more deeply into global value networks.
Employment, Investment, and Sustainability
The textile sector directly employs around 45 million people in India. Expanded EU demand is likely to translate into job creation across spinning, weaving, processing, garmenting, and allied services, particularly in MSME-dominated regions.
Crucially, the FTA goes beyond tariffs. Enhanced regulatory cooperation, customs facilitation, and transparency will help Indian firms address non-tariff barriers, often the biggest challenge in the EU market. The agreement is also expected to catalyse investment, technology transfer, and sustainability upgrades, especially in MMF, technical textiles, and green manufacturing, aligned with EU compliance norms.
Strategic Alignment with Viksit Bharat 2047
Together with India’s FTAs with the UK and EFTA, the India–EU FTA significantly deepens India’s integration with Europe. It reinforces India’s positioning as a reliable, sustainable, and high-value global sourcing hub, aligned with the long-term vision of Viksit Bharat 2047.
For India’s textile ecosystem, this is not just a trade agreement, it is a once-in-a-generation reset that links exports, employment, sustainability, and global competitiveness into a single growth narrative.
