17 Feb 2026·Source: The Hindu

4 min

EconomyInternational RelationsNEWS

India's Textile Export Opportunity: Can It Overtake Bangladesh in the EU?

India can leverage its FTA with the EU to boost textile exports.

Photo by 🇸🇮 Janko Ferlič

India's textile sector is losing ground in global export markets, while Bangladesh has seen export success. India's exports to the EU are concentrated in intermediate products. Bangladesh's exports exceed India's in readymade garment categories.

India's share of EU imports declined, while Bangladesh's share rose. India's unit values are consistently higher, reflecting structural disadvantages. Bangladesh enjoys duty-free, quota-free access to the EU under the Everything But Arms (EBA) scheme.

India faces EU Most Favoured Nation (MFN) tariffs. Bangladesh is set to lose its EBA benefits in 2029. India's agreement grants duty-free access to the EU's textile markets, subject to the double-stage processing requirement.

India is well-positioned to meet stricter rules of origin. Textiles remain a large employer in Indian manufacturing. Reviving textile exports could help India's employment crisis.

Vietnam's apparel exports surged after the EU-Vietnam FTA in 2020.

Key Facts

India's textile sector is losing ground in global export markets.

Bangladesh's exports exceed India's in readymade garment categories.

India's share of EU imports declined, while Bangladesh's share rose.

Bangladesh enjoys duty-free, quota-free access to the EU under the Everything But Arms (EBA) scheme.

Bangladesh is set to lose its EBA benefits in 2029.

The recently finalized agreement grants India duty-free access to the EU's textile markets, subject to the double-stage processing requirement.

UPSC Exam Angles

GS Paper 3 (Economy): Industrial growth, trade, investment models

Connects to government policies for boosting manufacturing and exports

Potential for questions on trade agreements, industrial policy, and sector-specific schemes

In Simple Words

India wants to sell more clothes to Europe. Right now, Bangladesh sells more because they don't have to pay taxes on their exports to the EU. But soon, Bangladesh might lose that tax-free advantage, and India has a new deal that could help them compete better.

India Angle

This affects Indian textile businesses, especially those making clothes for export. If India can sell more to Europe, it means more jobs for people working in textile factories and related industries.

For Instance

Think of it like two shopkeepers selling similar items. One gets a special discount from the supplier, but that discount is ending. Now, the other shopkeeper has a chance to attract more customers with better prices.

If India can boost its textile exports, it can create more jobs and boost the economy. This could lead to better incomes and opportunities for many Indians.

India's textile industry has a golden opportunity to grab a bigger slice of the European market.

Visual Insights

Key Statistics on India and Bangladesh Textile Exports

Highlights key figures related to textile exports from India and Bangladesh, focusing on their performance in the EU market.

Bangladesh EBA Benefit End: 2029

More Information

Background

The textile industry has historically been a significant contributor to India's economy and employment. Policies like import substitution in the early decades after independence aimed to foster domestic production. However, the economic reforms of 1991, which liberalized trade and investment, exposed the Indian textile sector to global competition. This led to a gradual shift in focus towards export-oriented production and the need to improve competitiveness. The Multi-Fibre Arrangement (MFA), which regulated global textile trade for decades, was phased out in 2005. This created new opportunities and challenges for textile-exporting countries. Countries like Bangladesh, with lower labor costs and preferential access to key markets like the EU, gained a competitive edge. India has been negotiating various Free Trade Agreements (FTAs) to improve market access and address the disadvantages faced due to tariffs. The 'Make in India' initiative launched in 2014, aims to boost domestic manufacturing, including textiles, by attracting investment and promoting innovation. The government has also implemented schemes like the Amended Technology Upgradation Fund Scheme (ATUFS) to modernize the textile industry and enhance its efficiency.

Latest Developments

In recent years, the Indian government has focused on promoting textile exports through various initiatives. The Production Linked Incentive (PLI) scheme has been extended to the textile sector to encourage investment in man-made fibers and technical textiles. This aims to diversify India's export basket and reduce its reliance on cotton-based products. Several committees have been formed to address the challenges faced by the textile industry, including issues related to infrastructure, skill development, and access to credit. These committees have recommended measures to improve the competitiveness of the Indian textile sector and enhance its export performance. The government is also working on simplifying regulations and reducing compliance burden to facilitate ease of doing business for textile manufacturers. Looking ahead, India aims to increase its share in the global textile market through a combination of policy interventions and industry initiatives. The focus is on promoting value-added products, improving quality standards, and leveraging technology to enhance productivity. The government is also exploring new export markets and strengthening its trade relationships with key partners.

Frequently Asked Questions

1. What are the key facts about India and Bangladesh's textile exports to the EU that are important for the UPSC Prelims exam?

For the UPSC Prelims, remember these key facts: India's textile exports to the EU are losing ground, while Bangladesh's are increasing. Bangladesh enjoys duty-free access to the EU under the Everything But Arms (EBA) scheme, which it is set to lose in 2029. India faces EU Most Favoured Nation (MFN) tariffs. India's share of EU imports declined from 6.5% in 2009 to 4.4% in 2023, while Bangladesh's rose to 26% in 2023.

Exam Tip

Focus on the percentage changes and the EBA scheme for potential MCQ questions.

2. What is the 'Everything But Arms' (EBA) initiative, and how does it give Bangladesh a competitive edge in textile exports to the EU?

The 'Everything But Arms' (EBA) initiative grants duty-free and quota-free access to the EU market for all products except arms and armaments from Least Developed Countries (LDCs). This gives Bangladesh a significant advantage because its textile exports enter the EU without tariffs, unlike India, which faces EU Most Favoured Nation (MFN) tariffs, currently at 12%.

Exam Tip

Remember that EBA provides duty-free, quota-free access, giving LDCs a competitive advantage.

3. How does India's Free Trade Agreement (FTA) with the EU potentially impact its textile exports, and what challenges remain?

India's FTA with the EU grants duty-free access to the EU's textile markets, but this is subject to a double-stage processing requirement. This means that to qualify for duty-free access, the textiles must undergo significant processing in India. While India is well-positioned to meet stricter rules of origin, challenges remain in scaling up production and competing with countries like Bangladesh that have existing duty-free access (until 2029).

Exam Tip

Note the double-stage processing requirement of the FTA, which is a key condition.

4. From an economic perspective, what are the pros and cons for India in trying to overtake Bangladesh in textile exports to the EU?

Pros: Increased export revenue, job creation in the textile sector, and a boost to the Indian economy. Cons: Requires significant investment in technology and infrastructure to compete with Bangladesh's cost advantages, potential trade disputes, and the need to comply with stringent EU regulations.

Exam Tip

Consider the long-term economic benefits versus the short-term investment costs.

5. Why is the topic of India's textile exports to the EU in the news recently?

This topic is in the news because India's textile sector is losing ground in global export markets, particularly to Bangladesh in the EU market. Recent developments include discussions on how India can leverage its Free Trade Agreement (FTA) with the EU to boost textile exports and address the structural disadvantages that make it less competitive.

Exam Tip

Be aware of the current discussions and policy changes related to textile exports.

6. What government initiatives are in place to support the textile sector and boost exports?

The Indian government has implemented the Production Linked Incentive (PLI) scheme to encourage investment in man-made fibers and technical textiles. This aims to diversify India's export basket and reduce its reliance on cotton-based products. The government is also focusing on leveraging Free Trade Agreements to gain preferential access to key markets.

Exam Tip

Remember the PLI scheme and its objectives for the textile sector.

Practice Questions (MCQs)

1. Consider the following statements regarding the 'Everything But Arms' (EBA) scheme of the European Union: 1. It grants duty-free and quota-free access to the EU market for all goods originating from Least Developed Countries (LDCs), except for arms and armaments. 2. Bangladesh currently benefits from the EBA scheme but is set to lose these benefits in 2029. 3. India also benefits from the EBA scheme. Which of the statements given above is/are correct?

A.1 and 2 only
B.2 and 3 only
C.1 and 3 only
D.1, 2 and 3

Show Answer

Answer: A

Statement 1 is CORRECT: The EBA scheme provides duty-free, quota-free access to the EU market for all products except arms and armaments, originating from Least Developed Countries (LDCs). Statement 2 is CORRECT: Bangladesh currently benefits from the EBA scheme but is scheduled to lose these benefits in 2029 as it graduates from LDC status. Statement 3 is INCORRECT: India does not benefit from the EBA scheme. It faces EU Most Favoured Nation (MFN) tariffs.

2. Which of the following factors has contributed to Bangladesh's success in textile exports compared to India? 1. Duty-free and quota-free access to the EU market under the 'Everything But Arms' (EBA) scheme. 2. Lower labor costs. 3. Higher unit values of exported textile products. Select the correct answer using the code given below:

A.1 and 2 only
B.2 and 3 only
C.1 and 3 only
D.1, 2 and 3

Show Answer

Answer: A

Factors 1 and 2 are correct. Bangladesh enjoys duty-free, quota-free access to the EU market under the EBA scheme and benefits from lower labor costs, giving it a competitive advantage over India. Factor 3 is incorrect. India's unit values are consistently higher, reflecting structural disadvantages, not advantages.

3. In the context of India's textile exports to the EU, what is the 'double-stage processing' requirement mentioned in the news?

A.It refers to the requirement that textiles must be processed in at least two different EU countries to qualify for duty-free access.
B.It refers to the requirement that textiles must undergo two stages of processing (e.g., spinning and weaving) within India before being exported to the EU to qualify for duty-free access under a trade agreement.
C.It refers to the requirement that textiles must be inspected twice before export.
D.It refers to the requirement that textiles must be made of at least two different types of fibers.

Show Answer

Answer: B

The 'double-stage processing' requirement refers to the condition that textiles must undergo two stages of processing within India to qualify for duty-free access to the EU market under a trade agreement. This ensures value addition within India.

4. Assertion (A): Reviving textile exports could help address India's employment crisis. Reason (R): Textiles remain a large employer in Indian manufacturing. In the context of the above statements, which of the following is correct?

A.Both A and R are true and R is the correct explanation of A
B.Both A and R are true but R is NOT the correct explanation of A
C.A is true but R is false
D.A is false but R is true

Show Answer

Answer: A

Both the assertion and the reason are true, and the reason correctly explains the assertion. The textile industry is a significant employer in India, and boosting textile exports can create more jobs, thus helping to address the employment crisis.