Textile companies look to tap into prospects offered by FTAs

CHENNAI: Free trade agreements offer the Indian textile industry a significant opportunity to expand its share in the EU, UK, and other markets, as they boost competitiveness. Large players, including Gokaldas Exports, KPR Mill, Arvind, Welspun Living, Vardhman Textiles, and Pearl Global Industries, have signaled export growth in these markets. Some, such as Trident and Arvind, are setting up showrooms, increasing brand visibility at trade fairs and appointing local executives in Europe to strengthen their presence.

Having been among the hardest hit by the US tariff escalation last year, the industry is keen to reduce its concentration on a single market. European and UK buyers are proactively diversifying sourcing away from Bangladesh and Vietnam, and tariff parity from FTAs will support India’s push, said 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 implementation of the FTA,” he said.

Jitin Makkar, SVP and group head at ICRA, said benefits from the trade deals are likely to accrue from FY28 onwards, with an expected 10-15% revenue growth. “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.

However, companies flag capacity addition as a key constraint, with a few ramping up production and others like Arvind 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.