India’s textile and apparel export industry expects the historic trade deal between India and the European Union (EU) to significantly lift the country’s market share and double apparel exports to Europe to about $11 billion.
The agreement, once implemented, is also expected to cushion the labour-intensive sector by enabling diversification away from the US, which has imposed a steep 50% tariff.
“The India–EU Free Trade Agreement is a historic move that can reset this imbalance and unlock growth in labour-intensive exports, especially apparel,” Prabhu D, Convenor of Coimbatore-based Indian Texpreneurs Federation (ITF), said. India’s apparel exports to the EU stands at $5.5 billion, with knitwear accounting for 56% and woven apparel 45%.
“Both segments are well-placed to scale,” he added.
Expanding Market Share
The EU imports nearly $95 billion worth of apparel annually from non-EU countries, with China and Bangladesh together accounting for over 50% of the market, while India’s share is around 5%. In the current year, India, China and Bangladesh recorded 6–8% growth in the EU apparel market, while Vietnam and Cambodia grew faster at 11–15%.
“With duty-free access expected within a year, India’s apparel exports to the EU can grow at a 15% CAGR, doubling to $11 billion over the next five years,” Prabhu said.
“It’s an historic moment for Tiruppur. We are already doing 25% of overall business to the EU. This trade deal will increase the share of Europe exports to 40%,” said KM Subramanian, President of the Tiruppur Exporters’ Association.
Countering US Tariffs
Tiruppur is estimated to have lost over ₹15,000 crore of business in 2025 due to 50% US tariffs, which forced American buyers to shift sourcing to markets such as Bangladesh, Vietnam and Cambodia. The knitwear hub exported close to ₹45,000 crore in the previous fiscal.
Subramanian said major fashion brands from Italy, Paris and Germany are already major buyers from Tiruppur, which is expected to see a significant uptick.
Under the FTA, which is to take effect in 2027, 70.4% of tariff lines covering 90.7% of India’s exports will see duty elimination from day one, for key labour-intensive sectors such as textiles, leather and footwear. Zero-duty access in textiles and clothing, covering all tariff lines and reducing tariffs by up to 12%, would open up the EU’s $263.5 billion import market.
India’s total textile and apparel exports stand at $36.7 billion, with the EU accounting for $7.2 billion.
“Duty rationalisation will further improve India’s competitiveness across cotton garments, home textiles and made-ups, while encouraging investments in man-made fibre, processing and finishing – areas where India has traditionally lagged thus far,” said Ronak Chiripal, Promoter of Ahmedabad-based Chiripal Group.
Leveling the Field
According to CareEdge Ratings, the trade deal with the EU—the world’s largest ready-made garment (RMG) market—will unlock $4–4.5 billion in export opportunities for the sector. Indian apparel exports to the European Union currently face import duties ranging between 9.6% and 12%, while several competing suppliers such as Bangladesh enjoy duty free access under preferential trade schemes.
The FTA, it said, creates a level playing field for accessing the EU’s RMG market, which is expected to reach $105 billion shortly.
“Upon implementation by 2027, India will gain a 12% duty advantage over China, which currently holds the largest market share of nearly 30% in the EU’s RMG imports,” CareEdge said. India is expected to gradually raise its RMG market share from 5% to 8–9%, unlocking incremental annual export opportunities of nearly $4–4.5 billion over the medium term.