Fashion
$6 bn of India’s T&A exports to the EU concentrated in 20 HS codes
Analysis at the product level
Over $6 billion of India’s textile and apparel exports to the EU are concentrated in just 20 four-digit HS codes, out of a total export base of ~$7.5 billion, making the India–EU FTA a sharply product-specific opportunity rather than a broad-based boost.
Finished apparel emerges as the primary beneficiary, as tariff parity improves India’s competitiveness against other Asian suppliers.
India and the European Union have signed the long-awaited Free Trade Agreement (FTA), with the pact expected to come into force in early 2027 (or earlier) following ratification. While trade flows will remain largely unchanged in the near term, product-wise export data indicates that the agreement could reshape India’s textile and apparel exports to the EU over the medium term, with gains concentrated in finished apparel rather than intermediate products.
India’s EU-facing textile and apparel exports are highly concentrated. The top 20 four-digit HS codes account for more than $6 billion, out of total textile and apparel exports of roughly $7.5 billion to the EU, underscoring where the FTA’s eventual impact is likely to be most visible.
Apparel dominates India’s EU export basket
Finished apparel forms the backbone of India’s textile and apparel exports to the EU, led by women’s wear, knitted garments, and core woven apparel. Home textiles represent the second pillar, while yarns, fabrics, and fibre-based products contribute a smaller share in value terms.
Table 1: India’s total Textile and Apparel exports to the EU-27 – Top 20 four-digit HS codes (2025)
Export growth in 2026 is expected to remain moderate as buyers focus on audits, compliance checks, and limited pilot orders ahead of implementation. A clearer divergence is expected from 2027, once tariff concessions take effect, with finished apparel emerging as the most responsive category.
Table 2: India–EU textile exports – Product-wise growth outlook (YoY growth %, indicative)
What to watch till 2027
Product readiness is expected to improve fastest in high-volume apparel categories, while home textiles see incremental upgrades rather than greenfield expansion. Compliance alignment, particularly on sustainability and traceability will be a key differentiator, with cotton-based segments better positioned than MMF apparel. Buyer engagement is likely to intensify through audits and pilot orders ahead of implementation, while competing suppliers such as Bangladesh and Vietnam are expected to defend share through pricing and buyer integration rather than capacity expansion. Final tariff schedules and rules of origin will determine which products benefit first.
The India–EU FTA signals a medium-term reset, not an immediate surge. With over $6 billion concentrated in the top 20 product groups, finished apparel is best positioned to lead post-2027 gains, while home textiles compound steadily and intermediates remain less responsive.
Fibre2Fashion News Desk (AA)
However, actual use of foreign direct investment (FDI) in the Chinese mainland declined during the same period, falling 5.7 percent year on year (YoY) to ¥161.45 billion ($23.43 billion), as mentioned in official ministry figures.
China established 8,631 new foreign-invested firms in the first two months of the year, up 14 per cent YoY, even as actual FDI inflows fell 5.7 per cent to ¥161.45 billion ($23.43 billion).
High-tech industries attracted ¥63.21 billion ($9.19 billion), rising 20.4 per cent and accounting for 39.2 per cent of total inflows, while investment from Canada and Switzerland surged sharply.
Sector-wise, FDI inflows totalled ¥47.52 ($6.90 billion) in manufacturing and ¥111.22 billion ($16.17 billion) in services, indicating continued dominance of the service sector in attracting foreign capital. High-tech industries remained a key growth area, drawing ¥63.21 billion ($9.19 billion) in investment, up 20.4 per cent year on year (YoY) and accounting for 39.2 percent of the national total.
In terms of source countries, investment from Canada and Switzerland recorded strong gains, surging 210 per cent and 41.3 per cent respectively compared with the same period last year, highlighting a shift in the composition of foreign capital entering the Chinese market.
Fibre2Fashion News Desk (JP)
In 2023, 73 per cent of APAC CEOs were optimistic about global economic prospects; however, it was down to 64 per cent in 2025. Globally, only 68 per cent of CEOs remain upbeat about this—the lowest level seen in four years.
APAC CEOs reported much more optimism in 2025 about the growth prospects of their own economies over the next three years, while confidence in global economic prospects dropped, KPMG said.
Optimism about their own country’s prospects was the highest in Australia and lowest in India last year.
About four-fifths of APAC CEOs also saw substantial growth opportunities for their organisations and industries.
Optimism about their own country’s prospects was the highest in Australia (90 per cent) and lowest in India (71 per cent) last year, a KPMG release said citing its latest annual ‘APAC CEO Outlook’.
The declining confidence of APAC CEOs in the global landscape also reflects ongoing uncertainty and volatility that has plagued the global markets, stemming from an evolving geopolitical landscape, persistent supply chain constraints and intensifying scrutiny on sustainability, KPMG noted.
Furthermore, about 80 per cent of APAC CEOs also saw substantial growth opportunities for their organisations and industries, in line with the global average.
In fact, in 2025, executives appear more certain that their companies are on an upward trajectory compared to the previous year: 61 per cent of respondents expect earnings to increase by more than 2.5 per cent this year, compared to just 52 per cent in 2024.
CEOs in Japan (76 per cent) are particularly optimistic about their earnings outlook compared to global and regional peers, reflecting its solid domestic demand and stable GDP performance.
This positivity is driving many in APAC to continue investing in their businesses, with executives noting that there is strong appetite for increased hiring (92 per cent) and mergers and acquisitions (87 per cent) over the next three years, and a substantial number (82 per cent) of APAC CEOs expecting to spend more than 10 per cent of their budgets on artificial intelligence (AI) in the next 12 months.
This clearly indicates that subdued global outlook has not dampened optimism around companies’ prospects in APAC, KPMG remarked.
Confidence in the growth prospects of the global economy is lowest among Chinese companies (58 per cent). This likely reflects, in part, the impacts of an uncertain tariff environment. Strained relations with its main export partner and uncertainty around global demand are likely some areas of concern among firms in China.
Global trade risks topped the minds of APAC CEOs last year, especially as geopolitical tensions and trade realignments dominated headlines. These trends have persisted in 2025, with supply chain resilience remaining a top three driver of organisational decision-making in the short term.
However, the landscape is shifting with the arrival of emerging technologies like generative AI. AI integration is the top issue driving APAC executives’ short-term decision-making, a notable contrast with global peers who are more focused on cybersecurity issues and supply chain resilience, KPMG added.
Fibre2Fashion News Desk (DS)
Strait of Hormuz disruption has unleashed a cascading cost shock across the textile value chain, from crude to fibre.
Indian PSF has surged 26.5 per cent while naphtha prices have spiked nearly 90 per cent, inflating feedstock costs.
The cotton–polyester spread has tightened to multi-year lows, while 31 force majeure declarations across Asian petrochemical plants intensify supply risks.
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