Chennai: Free trade agreements (FTAs) present a significant opportunity for the Indian textile industry to expand its market share in the European Union, the United Kingdom, and other regions by enhancing competitiveness. Major players such as Gokaldas Exports, KPR Mill, Arvind, Welspun Living, Vardhman Textiles, and Pearl Global Industries have already signaled export growth in these markets. Companies like Trident and Arvind are establishing showrooms, increasing brand visibility at trade fairs, and appointing local executives in Europe to strengthen their presence.
Reducing Market Concentration
The Indian textile industry was among the hardest hit by US tariff escalations last year, prompting a strategic shift to reduce dependence on a single market. European and UK buyers are proactively diversifying their sourcing away from Bangladesh and Vietnam. Tariff parity from FTAs will support India's push, according to Pallab Banerjee, managing director of Pearl Global Industries. “The EU and UK buyers are already placing trial orders and building vendor bases in India in anticipation of the FTA implementation,” he said.
Revenue Growth Projections
Jitin Makkar, SVP and group head at ICRA, noted that benefits from the trade deals are likely to accrue from FY28 onwards, with an expected revenue growth of 10-15%. “Given ongoing tariff-related uncertainty, corporate India will adopt geographical diversification as a key risk mitigation strategy in the long term. Exporters would look to strengthen their efforts to build a more geographically diversified customer footprint, even if it involves parting with some margins in the near term. This can attract long-term investments in the sector,” he said.
Capacity Constraints and Expansion
However, companies flag capacity addition as a key constraint. While some are ramping up production, others like Arvind are adopting investment-light expansion through partner factories in Sri Lanka, Bangladesh, and Egypt. India’s textile exports to the EU and UK stood at $9.76 billion in FY25. Industry estimates suggest this could rise to $15 billion once FTAs are fully operationalised.
