Zero-duty entry into EU’s $263.5 bn textile market to lift India’s exports, jobs under FTA

The EU is India’s second-largest export destination for textiles and apparel after the United States. In 2024, the EU’s global imports of textiles and apparel stood at USD 263.5 billion, underlining the sheer scale and long-term potential of the European market for Indian exporters. 

India and the European Union have concluded negotiations on a landmark Free Trade Agreement (FTA), marking a major step forward in one of India’s most strategic economic partnerships. Designed as a modern, rules-based trade framework, the agreement aims to address contemporary global challenges while enabling deeper market integration between the world’s fourth- and second-largest economies. 

FTA and textile & apparel

Under the FTA, India is set to gain zero-duty access across all textile and clothing tariff lines, with tariff reductions of up to 12%. This would open up the EU’s INR 22.9 lakh crore (USD 263.5 billion) import market to Indian exporters. Building on India’s global textile and apparel exports of INR 3.19 lakh crore (USD 36.7 billion), including INR 62.7 thousand crore (USD 7.2 billion) to the EU, the agreement is expected to significantly expand opportunities in yarn, cotton and man-made fibre apparel, ready-made garments, men’s and women’s clothing, and home textiles. The improved access is expected to help MSMEs scale operations, generate employment and strengthen India’s position as a reliable and sustainable sourcing partner.

Crucially, the FTA addresses a long-standing tariff disadvantage faced by India vis-à-vis competitors such as Bangladesh, Pakistan and Turkey. By levelling the playing field, the agreement gives a decisive boost to labour-intensive sectors and enhances price competitiveness in one of the world’s most sophisticated consumer markets.

EU and India trade ties 

For India’s textile and apparel sector, the FTA is particularly significant. The European Union is India’s second-largest export destination for textiles and apparel after the United States. In 2024, the EU’s global imports of textiles and apparel stood at USD 263.5 billion, underlining the sheer scale and long-term potential of the European market for Indian exporters. Over the past five years, India’s textile exports to the EU have recorded steady growth, supported by a diversified export basket spanning value-added and labour-intensive segments.

Ready-made garments account for around 60% of India’s textile exports to the EU, followed by cotton textiles at 17% and man-made fibre (MMF) textiles at 12%. Smaller but significant shares come from handicrafts and carpets at 4% each, jute products at 1.5%, and woollen, handloom and silk products. This composition highlights the artisanal, MSME-driven and employment-intensive nature of India’s textile trade with Europe.

Employment 

The textile sector employs around 45 million people directly in India. Better access to the EU market is expected to improve capacity utilisation, boost production and support employment across MSME clusters. The FTA is also likely to encourage investment, technology transfer and sustainability-linked upgrades, particularly in MMF, technical textiles and green manufacturing aligned with EU standards.

Beyond apparel, the agreement provides significant market access for home décor, wooden crafts and furniture, with duty reductions of up to 10.5%, strengthening India’s presence in high-value, design-led segments.

Cluster hubs to benefit

India’s textile exports to the EU originate from 342 districts across the country, reflecting broad-based regional participation. Cluster hubs such as Tiruppur, Karur, Surat, Moradabad and Bhadohi are expected to benefit significantly. Beyond tariff liberalisation, the FTA also addresses non-tariff barriers through regulatory cooperation, customs facilitation and predictable trade rules. Aligned with the vision of “Viksit Bharat 2047”, the India–EU FTA positions India as a competitive, forward-looking global textile and apparel hub while laying the foundation for inclusive and resilient growth.