FTA with EU to help Indian textile sector vis-à-vis Bangladesh, Pakistan and Turkey

India's FTA with the European Union is all set to correct a long-standing tariff disadvantage New Delhi faced vis-à-vis competitors like Bangladesh, Pakistan and Turkey in the textile export sector.

According to an Indian Textile Ministry note today, the FTA, termed by both India and the 27-nation EU as "the mother of all deals," gives a "decisive boost" to the labour-intensive textile sector, enhancing price competitiveness and expanding market access in one of the world's most sophisticated consumer markets.

The Ministry assesses that gaining zero duty access in textiles and clothing, covering all tariff lines and reducing tariffs by up to 12%, would open up the EU's INR $263.5 billion import market.

Building on India's current $36.7 billion in global textile and apparel exports, including $7.2 billion to the EU, such access would significantly expand opportunities, particularly in yarn, cotton yarn, man-made fibre apparel, Ready-Made Garments, men's and women's clothing and home textiles, according to an official note by the Textile Ministry.

Ready-Made Garments form the largest component ( 60%) of India's exports, followed by cotton textiles (17%), man-made fibre and MMF textiles (12%). handicrafts (4%), carpets (4%), jute products (1.5%), woollen (0.6%), handloom (0.6%) and silk products (0.2%), form an important part of India's textile exports to the EU.

The European Union is India's second-largest export destination for textiles and apparel, after the USA. The EU's total global imports of textiles and apparel stood at $263.5 billion in 2024, highlighting the scale and long-term potential of the EU market for Indian textile exporters.

India's textile exports to the EU have shown a positive growth in the last five years. India's textile exports to the EU are diversified across multiple value-added and labour-intensive segments.

The Indian textile sector employs around 45 million people directly in India. Improved access to the EU market is expected to boost production, capacity utilisation and employment across labour-intensive MSME clusters.

The FTA will also encourage investment, technology transfer, and sustainability-linked up-gradation, particularly in MMF, technical textiles and green manufacturing aligned with EU standards, facilitating deeper integration into global value chains.

Lower duties of up to 10.5% provides enhanced access, boosting the competitiveness of Indian wooden, bamboo and handcrafted furniture. The FTA supports growth in high-value, design-oriented segments and strengthens India's role in global furniture supply chains.

India's textile exports to the EU originate from a wide and geographically dispersed manufacturing base with 342 districts across the country exporting textile and apparel products, reflecting broad-based participation and regional inclusiveness.

The India–EU FTA is expected to significantly strengthen the Indian textile sector, which employs around 45 million people, by enhancing market access, improving competitiveness and supporting employment across key clusters, said the Textile Ministry.