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

India and the European Union have concluded negotiations on a historic 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.

TLC and textile and clothing

Under the FTA, India will have duty-free access to all textile and apparel tariff lines, with tariff reductions of up to 12%. This would open up the ₹22.9 billion ($263.5 billion) EU import market to Indian exporters. Based on India’s global textile and apparel exports of Rs 3.19 billion ($36.7 billion), including Rs 62.7 billion ($7.2 billion) to the EU, the agreement is expected to significantly expand opportunities in yarn, cotton and man-made garments, ready-made garments, menswear and women’s textiles. Improved access is expected to help MSMEs scale operations, generate employment and strengthen India’s position as a reliable and sustainable supply partner.

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

Trade links between the EU and India

For India’s textile and apparel sector, the FTA is particularly significant. The European Union is India’s second largest textile and apparel export destination after the United States. In 2024, the EU’s global textile and apparel imports stood at $263.5 billion, highlighting the large 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 registered steady growth, supported by a diversified export basket spanning value-added and labor-intensive segments.

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

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

Beyond apparel, the agreement provides significant market access for home decor, wooden crafts and furniture, with tax 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 come from 342 districts across the country, reflecting broad regional participation. Cluster centers like Tiruppur, Karur, Surat, Moradabad and Bhadohi are expected to benefit significantly. Beyond tariff liberalization, 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 and forward-looking global textile and apparel hub, while laying the foundations for inclusive and resilient growth.