India-EU FTA will increase competitiveness of Indian textiles: ICRA
By yash chouhan 2026-02-07 18:04:54
India–EU FTA to put Indian textiles on par with competitors: ICRA
Indian textile and apparel exports are expected to gain a significant competitive boost in the European market following the signing of the India–EU Free Trade Agreement (FTA). The agreement eliminates duties on Indian shipments, placing them on a level playing field with key competitors such as Bangladesh and Vietnam, according to an Investment Information and Credit Rating Agency (ICRA) report.
EU import duties on Indian textiles are expected to fall to zero, addressing a longstanding tariff disadvantage that had limited India’s competitiveness. Historically, the EU’s import dependence on India has remained below 5 per cent, with China, Bangladesh, Turkey and Vietnam leading supplies dur to preferential trade access and lower tariffs.
India’s apparel exports are estimated at over $16 billion in calendar year 2025 (CY2025), with nearly one-third going to the US and around 23 per cent to the EU, making Europe one of the largest export destinations for the sector. However, exports to the EU have remained largely flat in recent years due to sluggish retail demand, inflationary pressures and vendor diversification by global buyers, the report said.
The FTA is expected to be particularly beneficial for apparel and home textile segments, which stand to gain from tariff-free access.
Beyond sector-specific gains, the broader trade pact offers preferential zero-tariff access on 97 per cent of EU tariff lines covering 99.5 per cent of India’s export value, with a large portion of duties expected to be eliminated immediately upon enforcement.
Over the medium term, the level playing field could also support MSME exporters and reinforce India’s role as a reliable sourcing destination for the EU market.
