The recently signed free trade agreement between India and the European Union is set to have a seismic impact on the global fashion industry. What this really means is a massive shift in sourcing patterns, with European brands and retailers poised to dramatically increase their procurement from India at the expense of other major garment exporters.
Leveling the Playing Field
For years, Indian apparel and textile exporters have faced an uphill battle in the lucrative EU market, weighed down by tariffs of up to 12% that put them at a significant disadvantage compared to competitors like Bangladesh, Vietnam, and Turkey who enjoyed preferential access. But the new India-EU FTA changes the game completely, eliminating these tariffs and giving Indian manufacturers a level playing field.
The implications are staggering. Industry estimates suggest Indian apparel exports to the EU could grow by 20-25% annually once the deal is implemented, potentially doubling within just three years, compared to current growth rates of around 3%. The EU is the world's largest apparel importer, with total purchases valued at over $200 billion in 2024-25 - and India is primed to capture a much bigger slice of that pie.
Diversifying Supply Chains
The bigger picture here is that the India-EU FTA arrives at a critical juncture for global fashion brands. Amidst rising costs, supply chain disruptions, and heightened scrutiny over sustainability and labor practices, there is a concerted push to diversify sourcing away from traditional manufacturing hubs. The "China Plus One" strategy has been gaining momentum, and the frictionless access to India that this new trade pact provides makes it an increasingly attractive alternative.
Leading European retailers like Zara, IKEA, and C&A have already begun scouting Indian suppliers and ramping up assessments, anticipating a surge in orders once the FTA takes effect. Apparel manufacturers in textile hubs like Tirupur are bracing for a wave of new business, readying to scale up production to meet the expected demand.
Sustainability Advantages
Crucially, the India-EU deal also comes at a time when sustainability has become a paramount concern for fashion brands. Stringent environmental, social and governance (ESG) standards are now non-negotiable, and India's robust manufacturing capabilities, compliance track record, and transparency measures position it well to capitalize. As brands seek to overhaul their supply chains, the country's credentials as a responsible, sustainable sourcing destination will be a major draw.
In short, the India-EU free trade agreement is poised to reshape global fashion supply chains in the years ahead, unlocking immense opportunities for Indian apparel and textile producers while providing European brands with a much-needed strategic alternative. It's a win-win that will undoubtedly have reverberating effects across the industry.