Historic and Landmark India–EU FTA Pact – SIMA Hails Hon’ble Prime Minister’s Visionary Leadership
Coimbatore: 27th January 2026
The Southern India Mills’ Association (SIMA) has warmly welcomed and hailed the successful conclusion of the historic India–European Union Free Trade Agreement as a landmark moment in India’s global economic engagement, describing it as a visionary achievement under the leadership of Hon’ble Prime Minister Shri Narendra Modi. The agreement, concluded with the European Union, the world’s second-largest economy, assumes particular significance at a time when India stands as the fourth-largest economy globally. This comprehensive and mutually beneficial pact is expected to catalyse economic growth, enhance trade flows, and reinforce strategic and economic ties between India and all 27 EU member states.
Negotiations for the India–EU FTA, which began as early as 2007, had remained stalled for several years due to a range of complex issues. SIMA has noted that the renewed momentum and ultimate success of these negotiations are the result of sustained and focused efforts by the Hon’ble Union Minister of Commerce and Industry, Shri Piyush Goyal, under the strategic guidance and leadership of the Prime Minister. The timing of the agreement, coinciding with the 77th Republic Day of India, adds symbolic weight and marks a renewed chapter in India–EU economic relations, reflecting India’s growing confidence and stature in the global trade arena.
The relevance of the India–EU FTA is further amplified against the backdrop of widespread global trade disruptions and the imposition of abnormal and non-uniform tariffs by the United States. In this uncertain and evolving global trade environment, the agreement is expected to significantly enhance competitiveness, strengthen supply-chain resilience, and enable both India and the European Union to better navigate emerging economic challenges while safeguarding their respective growth trajectories.
In a statement issued from Coimbatore, Mr. Durai Palanisamy, Chairman of SIMA, expressed deep appreciation for the decisive leadership of the Hon’ble Prime Minister and the proactive role played by the Union Commerce Minister in bringing this long-pending agreement to fruition. He emphasised that the India–EU Free Trade Agreement would provide a substantial boost to the Indian textile and clothing industry, with ready-made garments, home textiles, technical textiles, and fabric segments emerging as major beneficiaries of enhanced market access and reduced trade barriers.
Mr. Palanisamy highlighted that India’s annual exports of textiles and clothing to the European Union are currently valued at approximately USD 8 billion, accounting for nearly six per cent of the EU’s total textile and apparel imports. With the implementation of the FTA, India would be better positioned to compete with key supplier nations such as Bangladesh, Turkey, and Vietnam, which currently command significant shares of the EU market. The agreement is also expected to strengthen India’s ability to compete more effectively with China, which remains the largest supplier to the EU textile market.
Mr. Durai Palanisamy
The SIMA Chairman further observed that the Hon’ble Prime Minister has consistently demonstrated strong commitment to addressing structural challenges within the textile sector and enhancing its global competitiveness. A series of proactive policy measures, including the removal of anti-dumping duties and quality control orders on man-made fibres and raw materials, the rationalisation of GST rates on man-made fibres and filaments, the placement of the entire textile value chain under the lowest GST slab, the provision of adequate duty refunds through Duty Drawback and RoDTEP, interest subvention, and need-based financial relief measures, have collectively strengthened the industry’s resilience. The rapid conclusion of free trade agreements with multiple countries, including the European Union, stands out as a critical component of this broader reform agenda.
Tamil Nadu, which accounts for nearly 29 per cent of India’s textile exports to the European Union with exports valued at around USD 2.3 billion, is expected to emerge as a major beneficiary of the India–EU FTA. Mr. Palanisamy noted that the combined impact of 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 leading global brands in Europe and the United Kingdom.
Beyond export growth, the agreement is also expected to facilitate the transfer of know-how in value addition, product development, and technological innovation, thereby strengthening India’s long-term global competitiveness. Except for spinning machinery, a substantial portion of advanced weaving, processing, and technical textile manufacturing machinery, as well as critical textile spares and accessories imported from the European Union, is likely to gain from improved trade terms. Currently, the Indian textile and clothing industry imports machinery worth approximately USD 2.6 to 3.0 billion annually from EU countries, and the FTA is expected to further enhance access to cutting-edge technology.
Mr. Palanisamy has appealed to the Hon’ble Prime Minister and the Union Commerce Minister to continue close dialogue with stakeholders and ensure the swift implementation of the Free Trade Agreements, including the India–UK FTA, within a timeframe of six to eight months. He stressed that timely operationalisation is crucial for reviving the textile and clothing industry, which has been grappling with a prolonged recession and under-utilisation of production capacity to the extent of 20 to 25 per cent. Early implementation would help restore capacity utilisation, stimulate investment, and generate employment for several million people across the textile value chain.
Concluding his remarks, Mr. Palanisamy described the India–EU Free Trade Agreement as a potential game changer for the textile sector and a key driver in achieving the industry’s long-term vision of expanding the textile business size from USD 172 billion to USD 250 billion and increasing exports from USD 37 billion to USD 100 billion by 2030. He noted that the agreement could also attract fresh investments of around USD 100 billion and create new employment opportunities for nearly 20 million people, particularly benefiting rural communities and women across the country.
