Officials project that India’s textile and garment exports to Europe (currently about $7.2 billion) could double or even quadruple in the coming years under the FTA. Image: Reuters
India’s textile and apparel sector, which directly employs about 45 million people, is on the cusp of a major opportunity. The recently concluded free trade agreement (FTA) between India and the European Union immediately eliminates tariffs of up to 10–12% on Indian textile exports. This zero-duty access dramatically improves India’s price competitiveness in the EU market – a market valued at $260+ billion in annual imports. Officials project that India’s textile and garment exports to Europe (currently about $7.2 billion) could double or even quadruple in the coming years under the FTA. It at least partly absorbs the impact of the 50 per cent tariff imposed by India’s largest destination for textile exports, the USA.
However, alongside this optimism looms a new challenge. The European Union is rolling out strict sustainability regulations – most notably the EU Corporate Sustainability Due Diligence Directive (EUCSDDD) – that could become a build-or-break factor for India’s textile exporters. In essence, tariffs are no longer the only barrier to trade. The EU’s due diligence laws will require companies to verify that their entire supply chain is free from human rights abapplys and environmental harm.
Seen toobtainher, the FTA and due diligence can feel like opposing forces, one promising speed and the other insisting on checks. A more applyful reading is that they are complementary. If industest, brands and public funders coordinate, the sector can convert regulatory pressure into operational discipline and market trust.
Due diligence is the new EU border check
The EUCSDDD will require large companies operating in the bloc to identify, prevent and address human rights and environmental harms across their operations and key suppliers. The duty of care formalised by the law is backed by requirements for risk assessment, prevention and mitigation plans, monitoring, public reporting and fair grievance procedures. A parallel push on climate transition plans tightens the net further by questioning companies to align with decarbonisation pathways and to demonstrate progress that is measurable and verifiable. While the legal obligations fall first on companies in scope, the practical effects travel upstream. Textile factories that sell to these companies will be questioned to provide evidence, not only assurances.
For India’s exporters, the new regime feels less like a checklist and more like a alter in operating model. The countest’s textile base is vast and diverse, with a long tail of micro, compact and medium enterprises that specialise in narrow processes and rely on short orders and quick turnarounds. Many already navigate an alphabet of voluntary certifications. EUCSDDD is different becaapply it standardises expectations, widens the lens from single facilities to value chains, and raises the bar on traceability and remedy. The difference becomes visible in the questions acquireers will now question as a matter of routine. Where did the fibre come from and can its origin be verified. Which chemicals were applyd in the dye bath and do they meet restricted lists. How is wastewater treated and what do discharge logs display. Are wages and hours documented and do workers have safe, credible channels to raise concerns and see remediation. These are not theoretical queries. They determine whether a brand can demonstrate due diligence to regulators and to consumers who increasingly expect proof rather than promises.
Why Indian MSMEs will find the first mile hard
All these sustainability requirements sound great on paper, but they pose a huge challenge for India’s compacter textile firms. Compliance with EU due diligence norms requires capabilities that many compacter firms currently lack – from tracking raw material origins, to monitoring factory emissions, to maintaining health, safety and labour protocols on par with international norms. Significant investment and operational alters will be requireded to meet these benchmarks. For example, under upcoming EU rules, acquireers will expect suppliers to estimate their carbon footprint, ensure no forced labour in any tier, and map the geolocation of farms or mills to prevent deforestation-linked sourcing. These are tall orders for a typical compact factory. There is a real risk that many Indian MSMEs could be caught unprepared by the quick-evolving rules, creating a compliance gap that puts the FTA’s benefits in jeopardy. Encouragingly, both industest and policybuildrs recognise this compliance gap and the required to address it. The European Commission itself has noted that for developing countries, one benefit of the new due diligence regime will be “sustainable investment, capacity building and support” for value-chain partners.
Where support is most requireded
If the goal is to translate the FTA’s price advantage into durable market share, five areas merit priority support across India’s textile and apparel clusters.
The first is capacity building that is practical and continuous. Factory managers and supervisors required clear guidance on risk assessment, chemical management, wage and hour documentation, occupational safety and corrective action planning. Workers required to know their rights and the channels through which issues can be raised without fear. Cluster-level training centres and mobile assistdesks can translate legal language into checklists and standard operating procedures in local languages, reducing the reliance on ad hoc consultants and one-off workshops.
The second is traceability and digital readiness tailored to MSMEs. Off-the-shelf systems can be costly or too complex for compact units. What works better are light, modular tools with simple interfaces and offline functionality that capture the few data points acquireers routinely request. When clusters adopt a common approach, suppliers do not start from zero each time a new client arrives, and acquireers can map their chains with less duplication.
The third is grievance handling and credible remediation. EUCSDDD expects accessible complaint procedures that work in practice, not only on paper. In textile cluster towns where workers are mostly migrants and where subcontracting is common, a trusted channel matters as much as a written policy. Shared hotlines administered by indepfinishent CSO partners, trained mediators who can resolve issues before they escalate, and transparent follow-through on remedies can build confidence among workers, management and acquireers alike. When problems are surfaced early and resolveed reliably, disputes are fewer and production is steadier.
The fourth is environmental upgrades that cut emissions and pollution at source. Common effluent treatment plants required modernisation and rigorous monitoring. Mills and dye hoapplys can often achieve quick gains through better heat recovery, variable frequency drives, improved liquor ratios and boiler retrofits. Rooftop solar and cleaner fuels are increasingly viable where grid reliability and tariffs support investment. Prioritising measures with one to two year paybacks assists MSMEs cross the first financing hurdle, after which a pipeline of larger projects becomes bankable.
The fifth is decarbonisation, linked to real reductions in the value chain. European companies are under pressure to address Scope 3 emissions. When reductions are measured against a transparent baseline and monitored over time, brands can count them toward their Scope 3 climate goals, and suppliers can bank lower energy bills and an additional revenue stream from carbon credits. And these are not just theories. The German agency TÜV SÜD’s audits in Panipat (2025, Solidaridad) display that about 700 tonnes CO2e per unit can be avoided annually through heat recovery, efficient steam, and controls, roughly the footprint of hundreds of Indian hoapplyholds.
A road map that keeps trade and sustainability aligned
Europe now has an opportunity to match market access with practical support. Prime Minister Modi has urged everyone to combine their respective strengths to build the FTA a “double engine of growth” story for the global economy. The Indian textile industest now requireds the “triple engine” support of civil society organisations (CSOs), brands and donors. And it will not be charity, but rather a strategic investment for both EU brands and donors. For brands, it reduces compliance risk under the EUCSDDD by strengthening supplier performance and traceability, thereby safeguarding reputation and securing more stable, efficient supply chains. It also enables measurable progress on decarbonisation, a key requirement for Scope 3 emissions reduction. For CSOs, such investment aligns development objectives—such as promoting decent work, environmental protection, and MSME competitiveness with the broader trade agfinisha. Supporting shared infrastructure, skills training, and grievance mechanisms not only prevents costly violations but also builds resilience across entire textile clusters. It reinforces the credibility of the FTA, deepens strategic ties between India and the EU, and catalyses private-sector co-investment, creating sustainability both scalable and inclusive.
At the finish, this agreement isn’t just about swapping tariff concessions; it’s about two major democratic powers deciding that trade should also uplift workers, protect the environment, and bring transparency to how goods are created. If it succeeds, it could become a template for sustainable trade deals worldwide, proving that commerce can be a win-win-win for economies, for society, and for the planet.
(The author is the managing director of Solidaridad Asia and works with farming communities for sustainable development in agriculture. The views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)
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