Textile sector elated as India gets duty-free access to European markets
CHENNAI: As India and European Union (EU) signed free trade agreement on Tuesday, the EU announced duty-free entry into the 27-nation bloc for textile and apparel.
The EU is India’s second biggest market for textile and apparel exports after the US. The sector has been bleeding due to the US tariffs of over 60% imposed by President Donald Trump in April 2025.
On the other hand, India has reduced tariffs on machineries imported to India from European countries by 44%. Indian textile and apparel sector would have zero-duty free access, covering all tariff lines and reducing tariffs by up to 12%, to the European markets.
Currently, India has $7.2 billion textile deal with the EU. The average import duty by European countries for Indian apparel is 10%. The duty-free access will help India to compete with Bangladesh, which already zero duty access to Europe, Vietnam, Sri Lanka and other countries.
Though the EU agreement would help the textile traders to mitigate the losses incurred due to the US tariffs, experts say that the possible benefit of the deal will start showing only in as late as FY28 as the European countries will have to ratify the documents.
KM Subramaniam, president of Tiruppur Exporters’ Association, said, “We welcome the long-awaited historical event happened today. We expect nearly 15% growth in Tirupur region once it is come to effective use.”
A Sakthivel, Chairman of Apparel Export Promotion Council, said, “The FTA eliminates tariff on 100% of apparel tariff lines which will enhance market access to all member countries of the EU. The EU is the world's largest apparel importer with total apparel import worth $202.8 billion in FY2024-25. Some of the major garment importing countries of the EU like Germany, France, Spain and Italy source substantially from India and this deal will further boost our apparel exports to these economies.”
He further added while EU sources 28% of apparel from India, India’s share of export is only 2.9% in the European countries. “With the elimination of tariff on Indian apparel products, the Indian apparel industry will gain immensely as it will get level playing field vis-à-vis its competing countries like Bangladesh, Turkey and Vietnam who enjoys duty free/ preferential duty access in EU’s market. It will particularly provide MSMEs of the apparel sector a much-needed easier and hassle-free market access to European economies benefitting them immensely,” he said.
While addressing the mediapersons in New Delhi, Union Commerce Minister Piyush Goyal said after the FTA, textile sector would see new employment of 6 million to 7 million. Moreover, the chemicals such MEG and PTA which are imported for textile manufacturing will be reduced from 22% to zero once the agreement comes into force. This will benefit man-made fibre and polyster textile manufacturers.
Experts and traders believe that overall exports would grow by nearly 50% in the next five years and incremental gains of $10-11 billion over baseline levels. Cautioning the industry, Haresh Calcuttawala, CEO and co-founder of Trezix, said, “Long term success in European markets will depend on delivering consistent quality, compliance, and value for money that European customers expect. Ultimately, the agreement is not just about trade expansion, but about building competitiveness, credibility, and sustainable growth for India’s exporters.”
According to the European Commission, the next step of it will be to publish negotiated draft texts shortly. The texts will go through legal revision and translation into all official EU languages. The Commission will then put forward its proposal to the Council for the signature and conclusion of the agreement. Once adopted by the Council, the EU and India can sign the agreements. Following the signature, the agreement requires the European Parliament's consent, and the Council's decision on conclusion for it to enter into force. Once India also ratifies the agreement, it can enter into force.