Indian textile and apparel exports are set to gain a significant competitive boost in the European market as the India–EU Free Trade Agreement (FTA) eliminates duties and places Indian shipments on a level playing field with key competitors such as Bangladesh and Vietnam, among other preferential trade partners, according to an ICRA report.
The agreement is expected to bring down EU import duties on Indian textiles to zero, addressing a longstanding tariff disadvantage that had limited India’s competitiveness in the region. The report notes that preferential access and lower tariffs previously enabled competing countries to maintain a stronger foothold in the EU market, while Indian exporters faced structural pricing constraints.
The report also highlights that the EU’s import dependence on India has historically remained below 5%, with China, Bangladesh, Turkey and Vietnam leading supplies to the region. Preferential trade access and lower tariffs had placed Indian exporters at a structural disadvantage prior to the agreement.
India’s apparel exports are estimated at over USD 16 billion in CY2025, with nearly one-third going to the US and around 23% to the EU, making Europe one of the largest export destinations for the sector. However, exports to the EU have remained largely flat in recent years due to sluggish retail demand, inflationary pressures and vendor diversification by global buyers.
The India–EU FTA is expected to be particularly beneficial for apparel and home textile segments, which stand to gain from tariff-free access. Duty elimination is likely to enhance price competitiveness, support greater sourcing opportunities from European retailers and strengthen India’s positioning within European supply chains. The report highlights that the agreement could act as a structural catalyst for export growth, improved competitiveness and long-term investments across the textile value chain.
Beyond sector-specific gains, the broader trade pact offers preferential zero-tariff access on 97% of EU tariff lines covering 99.5% of India’s export value, with a large portion of duties expected to be eliminated immediately upon enforcement. This wide-ranging market access is likely to strengthen labour-intensive sectors, including textiles, while enhancing India’s integration into global value chains.
Improved market access could help Indian exporters expand sourcing opportunities with European buyers and attract investments in capacity expansion, technology upgrades and product diversification. Over the medium term, the level playing field could also support MSME exporters and reinforce India’s role as a reliable sourcing destination for the EU market.
The agreement could also have positive spillover effects across the broader textile value chain as improved market access supports capacity expansion and competitiveness across multiple segments.
Source – ICRA
