Recent high-level trade talks between India and the European Union have signalled renewed momentum for a long-awaited Free Trade Agreement (FTA), with a particular emphasis on creating mutually beneficial opportunities for the textile and related industries. Following a weekend dialogue in Brussels between European Commissioner for Trade and Economic Security, Maroš Šefčovič, and Indian Commerce Minister, Piyush Goyal, both sides expressed optimism about overcoming past hurdles and forging a robust trade partnership.
While previous FTA discussions, initiated in 2007 but stalled in 2013, faced roadblocks concerning market access for specific sectors, the latest round of talks has prioritised a “commercially meaningful market access package in industrial goods and services,” according to Šefčovič. This focus directly impacts the textile sector, encompassing raw materials, manufacturing processes, and finished goods. The aim is to establish “clean tech supply chains” that will sustain both economies for decades, suggesting a potential focus on sustainable and innovative textile production.
Goyal emphasised the need for “fair solutions for mutual benefit,” acknowledging the differing levels of economic development between India and the EU. This is crucial for the textile industry, where India holds a significant position in global production. The discussions addressed the simplification of processes and finding cost-competitive ways to expand trade, particularly benefiting Micro, Small, and Medium Enterprises (MSMEs), a vital component of India’s textile landscape.
A key challenge highlighted was the reduction of non-tariff barriers (NTBs). While the EU’s average tariffs are lower than India’s, NTBs pose a significant impediment to Indian exporters. Lowering these barriers is crucial for maximising the benefits of an FTA for the Indian textile sector, enabling greater access to the EU market. This includes streamlining regulations, standards, and conformity assessment procedures, which often create complexities for textile businesses.
Rules of Origin (ROO), a persistent point of contention in previous talks, remain a key area of negotiation. These rules determine the national source of a product, influencing tariff application and trade flows. Establishing clear and mutually acceptable ROO is essential for textile businesses to effectively leverage the FTA.
The renewed commitment to accelerating negotiations, as confirmed by EU Ambassador to India, Herve Delphin, signifies a positive shift. The focus on a “win-win outcome” and a “consequential, viable, and outcome-oriented agreement” suggests a willingness to address past sticking points, including those related to market access for specific textile products and the harmonization of standards.
The successful conclusion of the EU-India FTA holds significant potential for the textile industries of both regions, fostering increased trade, investment, and collaboration in areas such as sustainable manufacturing, technological innovation, and skill development.
