The India-EU Free Trade Agreement (FTA) aims to remove duties, leveling the playing field for Indian exports against competitors like Bangladesh and Vietnam. Specifically, the agreement is set to eliminate EU import duties on Indian textiles, addressing a long-standing tariff disadvantage hindering India’s competitiveness in the region. This move is expected to benefit the apparel and home textile sectors significantly by providing tariff-free access to the European market.
The ICRA report highlights that the preferential trade access and lower tariffs enjoyed by other countries had put Indian exporters at a structural disadvantage before this agreement. With the EU historically depending on India for less than 5% of its imports, countries like China, Bangladesh, Turkey, and Vietnam have been the primary suppliers to the region. The FTA is seen as a strategic step to enhance India’s price competitiveness and strengthen its position in European supply chains.
India’s apparel exports, estimated at over $16 billion in 2025, see a substantial portion heading to the US and the EU. However, exports to the EU have been stagnant due to factors such as weak retail demand and vendor diversification. The FTA is expected to provide a boost to the sector by facilitating greater sourcing opportunities from European retailers and driving export growth. The agreement is anticipated to benefit labor-intensive industries like textiles and enhance India’s participation in global value chains.
