The EU-India Free Trade Agreement, a massive booster for the Indian textile industry

By Ignace Hindrick, President BLBA (Belgium Luxembourg Business Association New Delhi)

On 27^th January 2026, India and the European Union announced the conclusion of negotiations for a landmark Free Trade Agreement (FTA) after 18 years of talks.

The pact will only enter into force after ratification by the competent authorities on both sides (hopefully by mid-2027) and is described as the “mother of all trade deals” due to its massive scale, covering 25% of global GDP and 2 billion people.

It will create the largest free trade zone by uniting 2 economic powerhouses into one common marketplace.

The impact is enormous: as per news reports India will eliminate or reduce tariffs on 96.6% of EU exports by 2032. This phased liberalization will significantly boost access to EU customers and save an estimated €4 billion annually in duties.

Meanwhile, the EU will reciprocate by reducing or eliminating tariffs on 99.5% of Indian goods by value benefiting key sectors like textiles, leather, marine goods, chemicals, jewellery, etc.

An important provision for the Indian textile industry is that the draft agreement mentions immediate duty elimination and phased concessions for Indian textiles and apparel entering the European Union, completely eliminating previous tariffs that ranged between 8 and 12%. The zero-duty provision is comprehensive and covers all major sectors of India’s textile exports, including readymade garments, home textiles, made fibre apparel and technical textiles, artisanal products, including handicrafts, carpets and silk products.

It is a massive booster for the Indian textile industry and textile related sectors as it will allow India to compete directly with nations like Bangladesh and Vietnam, potentially unlocking billions in EU demand and creating millions of jobs.

This transition will enable direct access to the EU’s massive $263.5 billion textile and apparel import market. India’s current export of textile and apparel to the EU is $7.2 billion.

Key benefits

Ready-made garments: positioned for exponential growth in Europe
Man-made fibre apparel: will gain significant access into the EU
Yarn and home textiles: enhanced access for cotton yarn, specialized yarns and home furnishing products
Deeper value chain integration: Indian textile manufacturers can now seamlessly integrate into European supply chains, fostering long-term partnerships and sustainable growth opportunities across the entire textile ecosystem.

India’s textile industry is predicted to double its contribution to the country’s GDP from 2.3% to around 5% by the end of this decade.

The deal is clearly a win-win partnership for the world’s 2^nd and 4^th largest economies and the most substantial tariff opening India has ever offered. While some tariff cuts will happen instantly, cuts on others will be done gradually over 3, 5, 7 or 10 years.