India EU Trade Deal Boosts Textile Export Growth

A landmark trade agreement between India and the European Union has created a significant new export corridor for Indian textile manufacturers, industry sources say, with implications for jobs, urban industrial clusters and global supply chain resilience. The pact, finalised on 27 January 2026, will eliminate tariffs on most textile and apparel shipments to the EU — one of the world’s largest consumer markets — potentially transforming export dynamics for India’s labour-intensive sector. 

Under the Free Trade Agreement (FTA), Indian textile and clothing exports will gain zero-duty access across all tariff lines, removing the average import levies of up to 12% that previously hindered competitiveness. This aligns Indian exporters with rivals who have already secured preferential treatment in Europe, narrowing a long-standing tariff disadvantage against countries such as Bangladesh and Pakistan. Industry analysts highlight that the EU’s $263.5 billion textile and apparel import market presents a substantial opportunity. While India currently ships around $7–$9 billion of textiles and garments to the bloc, the removal of duties is expected to catalyse expansion into higher-value segments such as cotton and man-made fibre apparel, ready-to-wear garments, and home textiles. 

For urban manufacturing hubs like Tiruppur, Surat and Panipat, and sprawling MSME clusters spread across multiple states, the trade deal could enhance capacity utilisation and spur new investment. Urban planners suggest that expanding export-oriented textiles will require parallel upgrades in logistics, port connectivity and sustainability standards to meet stringent EU compliance requirements. Experts also point out that increased production could catalyse infrastructure development in secondary cities that host textile value chains. From an employment perspective, the textile sector is among India’s largest employers, directly engaging around 45 million workers, many in smaller towns and peri-urban areas. With improved market access, industry projections suggest the potential creation of millions of new jobs, particularly if exporters scale up capacity and diversify product offerings. 

Economists caution that realising these gains will depend on maintaining competitiveness in input costs and navigating global supply chain shifts, including compliance with evolving carbon and sustainability standards in Europe. Urban development advocates stress that enhancing skills in textile clusters and ensuring inclusive growth — particularly for women and marginalised workers — will be essential for cities and towns anchored in this sector. 

The trade agreement also reflects a broader strategic push to diversify export markets beyond traditional partners, strengthening India’s integration into global trade flows. Looking ahead, implementation will require coordinated policy support, infrastructure investment and sustainability planning to ensure Indian textile exports capitalise on the new opportunities created by the India-EU trade deal.

Also Read: Jharkhand NMDC Begins Coal Operations At Tokisud North

India EU Trade Deal Boosts Textile Export Growth