Textiles & Apparel

India and the European Union share one of the oldest and most deeply rooted textile trade relationships in the world. With bilateral trade hovering around €7 billion annually, the corridor spans everything from raw cotton yarn shipped out of Gujarat to finished fast-fashion garments arriving at distribution centers in Rotterdam and Hamburg. India is the EU's second-largest supplier of apparel after Bangladesh, and the third-largest supplier of technical textiles. On the flip side, European brands — particularly Italian and French luxury houses — source significant volumes of hand-embroidered fabrics, silk, and specialty weaves from Indian artisan clusters that simply have no equivalent elsewhere.

The India-EU Free Trade Agreement concluded on January 27, 2026 is set to reshape this corridor dramatically. The EU will eliminate duties on 70.4% of tariff lines immediately upon entry into force (expected early 2027), with remaining lines phased out over 5-10 years. For textiles specifically, this means tariffs of 12-17% — which have historically made Indian goods less competitive against duty-free Bangladeshi or Vietnamese exports under EBA and EU-Vietnam FTA — will disappear. We've estimated that Indian exporters stand to gain roughly €800 million in additional annual trade within five years of implementation, with knitwear, home textiles, and synthetic blends seeing the sharpest uptick.

That said, tariff elimination alone won't drive success. EU buyers increasingly demand OEKO-TEX Standard 100 certification, REACH compliance for chemical inputs, and credible ESG documentation covering factory conditions and environmental impact. Indian exporters who invest in these certifications now — before the FTA enters into force — will be first to capture the price advantage. The clusters best positioned are Tirupur for knitwear, Surat for synthetic textiles, Panipat for home furnishings, Ludhiana for woolen garments, and Bhilwara for polyester yarn and fabric.