India FTA with EU could offer Indian cloth exporters a$ 2- billion occasion
India FTA with EU: The FTA is anticipated to be inked on January 27, with EU Commission chairman Ursula von der Leyen and European Council chairman António Costa anticipated in Delhi as the principal guests at the Republic Day cortege.
Indian cloth and vesture exporters may gain a long- awaited position playing field in the European Union as the India – EU Free Trade Agreement( FTA) nears finalisation.
The India- EU FTA is anticipated to be inked on January 27, with EU Commission chairman Ursula von der Leyen and European Council chairman António Costa in Delhi as the principal guests at the Republic Day cortege on January 26.
In FY25, India exported$ 7.6 billion worth of fabrics and apparels to the EU but tariffs ranging from 6 to 20 percent have eroded competitiveness, putting Indian suppliers at a disadvantage against challengers similar as Bangladesh, which enjoys zero- duty access under the EU’s Everything but Arms( EBA) scheme, and Vietnam that enjoys tariff-free entry through its FTA with the 27- nation bloc.
Elimination of these duties under the India – EU FTA could lower prices for European buyers, boosting demand.
Indeed a moderate drop in prices can raise Indian cloth exports by roughly$ 1.5 – 2 billion a time. The estimate is grounded on applying the likely EU tariff cuts to India’s cloth exports in FY25 and assuming that lower prices will boost demand by 15 – 25 percent, a standard system in trade analysis.
These earnings will probably materialise only after the FTA is enforced, which could take at least a time after subscribing due to the EU’s lengthy ratification process.
In February 2025, India and the EU decided to ramp up addresses for the proposed FTA, targeting to originally close it by the end of that time to drift over trade dislocations.
In FY25, India’s exports to the EU totalled$ 75.85 billion, while significances from the bloc reached$ 60.68 billion, making it the South Asian nation’s largest trading mate for goods.
Being negotiated for over a decade, the India- EU trade deal has 24 chapters across goods and services.
More request access to the EU would be pivotal given that Indian cloth exports to the US are facing challenges due to steeper tariffs of 50 percent, compared with duties of around 20 percent for Bangladesh and Vietnam.
The US is the single- largest request for India’s cloth and vesture exports, counting for nearly 28 percent of the import profit from the sector.
India’s exports of cloth and vesture products to the US were valued at nearly$ 11 billion in FY25.
In FY25, India exported cloth and vesture, including crafts, worth$ 37.7 billion, counting for roughly 8.6 percent of the country’s outbound shipments.
