India has successfully concluded a Free Trade Agreement (FTA) with the European Union, the world’s second-largest economy, while India stands as the fourth largest. This landmark, win-win trade agreement is poised to benefit India and all 27 EU member countries by catalysing economic growth and strengthening trade, safety, and strategic security ties.
Negotiations that commenced in 2007 had remained stalled for several years due to various issues. However, the concerted and sustained efforts of the Hon’ble Union Minister of Commerce and Industry, Shri Piyush Goyal ji, under the visionary leadership and guidance of Hon’ble Prime Minister Shri Narendra Modi ji, have expedited the process and brought it to a successful conclusion. The timing of this achievement, coinciding with the 77th Republic Day of the nation, lends it added significance and symbolism, offering a renewed lease of life to India–EU economic relations.
Against the backdrop of unprecedented global trade disruptions and the imposition of abnormal and non-uniform tariffs by the United States, the India–EU FTA assumes greater relevance. The agreement is expected to enhance competitiveness, deepen supply-chain resilience and enable both India and the European Union to strengthen their economies amid an increasingly uncertain global trade environment.
In a press release issued here today, Mr. Durai Palanisamy, Chairman, The Southern India Mills’ Association (SIMA), has highly appreciated and complimented the Hon’ble Prime Minister Shri Narendra Modi ji and the Hon’ble Union Minister for Commerce and Industry, Shri Piyush Goyal ji, for this landmark achievement between India and the European Union.
He stated that the India–EU Free Trade Agreement would provide a significant boost to the Indian textile and clothing industry, with the ready-made garments, home textiles, technical textiles, and fabrics segments emerging as the major beneficiaries.
Mr. Durai further stated that India’s annual exports of textiles and clothing to the European Union are valued at around USD 8 billion, accounting for nearly 6 per cent of the EU’s total textile and apparel imports. He noted that the conclusion of the India–EU FTA would enable India to effectively compete with key supplier countries such as Bangladesh, Turkey, and Vietnam, which currently command shares of about 21 per cent, 10 per cent, and 5 per cent respectively. He added that the agreement would also strengthen India’s ability to compete with China, which remains the largest supplier to the EU with a share of around 29 per cent.
SIMA Chairman has stated that Hon’ble Prime Minister has been giving major thrust for addressing the structural issues and strengthening global competitiveness. Removal of Anit-Dumping Duty and Quality Control Orders on Man-made fibers, Raw Materials, reduction of GST from 18% to 5% on Man-made Fibers and 12% to 5% on Man-made Filaments, slotting entire textile value chain under the lowest slab of 5%, adequately refunding duties by way of Duty Drawback, RoDTEP, interest subvention, need based financial relief measures to tide over the crisis, conclusion of FTA’s with several countries in record time including EU are some of the proactive initiatives taken by the Government, says Mr. Durai.
SIMA Chairman has stated that Tamil Nadu accounts 29% of the Indian textile export to EU country to the tune of 2.3Bn USD and the State would be the major beneficiary of India-EU pact. He added that the India–EU and India–UK Free Trade Agreements would create significant opportunities to double exports from major textile clusters such as Tiruppur and Karur, which predominantly supply knitted garments and kitchen linen to several leading global brands based in the European Union and the United Kingdom.
He has pointed out that the deal would also benefit the country to get know- how on Value Addition, product development, Technology innovation etc., and strengthen the global competitiveness. Mr. Durai has stated that except spinning machinery majority of the state-of-the-art technology weaving machines, processing machines, technical textile manufacturing machines, critical textile spares and accessories being imported from EU would also gain advantage and improve the competitiveness. He has said that Indian Textile & Clothing industry is currently importing around 2.62-3Bn USD worth textile machineries from EU countries.
SIMA Chairman appealed to the Hon’ble Prime Minister Shri Narendra Modi ji and the Hon’ble Union Minister for Commerce and Industry, Shri Piyush Goyal ji, to continue the dialogue and ensure the expeditious implementation of the Free Trade Agreements, including with the United Kingdom, within a timeframe of six to eight months. He emphasised that timely implementation is critical to reviving the textile and clothing industry, which has been passing through a prolonged period of severe recession, resulting in under-utilisation of production capacity to the extent of 20–25 per cent. He added that early operationalisation of the FTAs would help restore capacity utilisation and generate employment for several million people across the textile value chain.
Mr. Durai has stated that India-EU FTA would be the game changer and driver for the textile industry to achieve the vision of increasing the textile business size from USD 172Bn to USD 250Bn and exports from 37Bn USD to 100Bn USD by 2030, increase new investment to the tune of 100Bn USD and create new jobs for 20 million people especially the rural masses and women folks across the nation.
