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EU-India FTA: Impact On India’s Textile & Apparel Exports To EU

• By  Textile Excellence
• January 27, 2026

India and the European Union are set to conclude a landmark free trade agreement after nearly two decades of negotiations, a pact leader on both sides have described as the “mother of all deals.” The announcement at the India-EU summit in New Delhi will bring together the world’s two largest economic blocs, creating a market of around two billion consumers and strengthening trade ties that accounted for US$136.5 billion in goods in 2024-25.

Under the proposed agreement, tariffs on a wide range of goods will be reduced or eliminated, opening significant opportunities for India’s labour-intensive sectors including textiles and apparel, leather, engineering goods and processed foods. Indian textile exports to the EU currently face tariff barriers of roughly 10-16%, placing them at a disadvantage compared to competitors enjoying preferential access. Industry stakeholders and trade bodies have called for zero duty access for cotton textiles and garments to improve competitiveness.

The deal also aims to reduce import duties on European goods such as automobiles, machinery and wines, expanding market access for EU producers. Economic analysts expect the pact to boost bilateral trade further, helping Indian exporters offset recent tariff pressures from the United States and diversify export destinations. Ratification by Indian and EU legislative bodies is expected to take around a year before implementation begins.

Indian apparel exports to the European Union currently face import duties ranging between 9.6% and 12%, while several competing suppliers enjoy duty free access under preferential trade schemes. Least Developed Countries such as Bangladesh benefit from the EU’s Everything But Arms framework, giving them zero duty access for apparel and textiles. This tariff asymmetry has long eroded India’s price competitiveness despite strong manufacturing depth, scale and compliance standards.

India exported apparel worth nearly US$17.5 billion to the EU in 2024, making the bloc its largest destination after the United States. Industry estimates suggest tariff elimination under the India EU trade agreement could lift apparel exports to Europe by 20% to 25% within three years, driven by improved margins and stronger buyer confidence.

A level playing field with Bangladesh, Vietnam and Cambodia is expected to accelerate sourcing shifts towards India, especially for value added categories, sustainable products and shorter lead time programs. The agreement could also support India’s ambition to raise total textile and apparel exports to US$100 billion by 2030, reinforcing its position as a trusted global sourcing hub.

The deal also aims to reduce import duties on European goods such as automobiles, machinery and wines, expanding market access for EU producers. Economic analysts expect the pact to boost bilateral trade further, helping Indian exporters offset recent tariff pressures from the United States and diversify export destinations. Ratification by Indian and EU legislative bodies is expected to take around a year before implementation begins.