Textiles Sector Gains Duty-Free E.U Access

With the new FTA signed earlier this month, the European Union has granted India an opportunity to export textiles without facing customs tariffs. The Directorate of Commerce Ministry has indicated duty-free importation of textiles, such as cotton and woollen products, by all 27 member states of the E.U.

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The estimated annual value of all textile imports into the E.U is approximately ₹22.9 lakh crore (~€327 billion) as reported by PTI.

The January 27 announcement will provide a significant advantage for Indian textile manufacturers to compete competitively with other countries.

FTA Tariff Elimination Benefits

Benefits of having an FTA with the E.U include the elimination of tariffs on textiles and clothing at all levels. Up to a maximum tariff of 12%, tariffs will be waived immediately.

The E.U is one of the largest European destinations for Indian textile exports. The agreement creates a level playing field against other countries, allowing for more affordable production costs for Indian suppliers of textiles, apparel, fabrics, and yarn products.

Market Opportunity Expansion

The unlocking of E.U demand via access to shipping services indicates that there is a significant demand for European imports, as shown by the size of the European import market, which displays great potential for volume increases.

After the implementation of the agreement, members of the shipping community are expected to ship a higher volume of goods than prior to its implementation. In addition, the reduction in the amount of duty that is paid provides additional profit.

In addition to facilitating shipping and trade between the two regions, the agreement will foster a stronger and more successful shipping industry in India and the E.U.

The Ministry of Commerce indicated that comprehensive tariff coverage is provided. Tariff reductions are expected to immediately add at least 10-12% to the value of goods being shipped.