EU FTA to put Indian textiles on level-playing field with Bangladesh, Vietnam

by IANS |

New Delhi, Feb 7 (IANS) The India-EU Free Trade Agreement (FTA) eliminates duties and places Indian shipments on a level-playing field with key competitors such as Bangladesh and Vietnam, among other preferential trade partners, according to a new report.

The agreement is expected to bring down EU import duties on Indian textiles to zero, addressing a longstanding tariff disadvantage that had limited India’s competitiveness in the region.

The ICRA report notes that preferential access and lower tariffs previously enabled competing countries to maintain a stronger foothold in the EU market, while Indian exporters faced structural pricing constraints.

The EU’s import dependence on India has historically remained below 5 per cent, with China, Bangladesh, Turkey and Vietnam leading supplies to the region.

Preferential trade access and lower tariffs had placed Indian exporters at a structural disadvantage prior to the agreement.

India’s apparel exports are estimated at over $16 billion in 2025, 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, said the ICRA report.

The India–EU FTA is expected to be particularly beneficial for apparel and home textile segments, which stand to gain from tariff-free access, it added.

“Duty elimination is likely to enhance price competitiveness, support greater sourcing opportunities from European retailers and strengthen India’s positioning within European supply chains. The report highlights that the agreement could act as a structural catalyst for export growth, improved competitiveness and long-term investments across the textile value chain,” said the report.

The wide-ranging market access is likely to strengthen labour-intensive sectors, including textiles, while enhancing India’s integration into global value chains.