Key facts
- India and the EU finalized a Free Trade Agreement on January 27, 2026, after nearly two decades of negotiations.
- The FTA provides Indian textiles and apparel with zero-duty access to the EU market, eliminating tariffs up to 12%.
- This agreement is projected to increase India's textile exports to the EU to between $30 billion and $40 billion.
- The deal aims to level the playing field for Indian exporters against competitors like Bangladesh and Pakistan.
- The EU is India's second-largest export destination for textiles and apparel, with global imports valued at $263.5 billion in 2024.
India's textile exporters are experiencing a renewed sense of optimism and seeing an increase in orders following the finalization of a Free Trade Agreement (FTA) with the European Union. The agreement, concluded on January 27, 2026, after nearly two decades of negotiations, grants Indian textiles and apparel zero-duty access across the entire EU tariff spectrum, eliminating duties that previously reached up to 12%. This move is expected to significantly enhance India's competitiveness against duty-free rivals such as Bangladesh and Pakistan.
The EU's global imports of textiles and apparel stood at $263.5 billion in 2024, presenting a substantial market opportunity for India. The FTA is projected to expand India's textile exports to the EU to between $30 billion and $40 billion. This enhanced market access is anticipated to stimulate production, increase capacity utilization, and generate employment within India's labor-intensive textile sector, which directly employs approximately 45 million people. The agreement also addresses sustainability concerns, aligning with the EU's Ecodesign for Sustainable Products Regulation and Digital Product Passport framework.
This trade deal comes at a critical time for Indian exporters, who have also faced challenges such as U.S. tariffs. The FTA is seen as a crucial step in offsetting some of the damage from these tariffs and reinforcing India's position as a reliable sourcing partner. The agreement is expected to be implemented in about a year, with the EU immediately removing duties on 90% of Indian goods.