Union Budget 2026: Monetising FTAs to Accelerate Textile & Apparel Export Growth

New Delhi, 16 January 2026: India's textile and apparel exports (approx. USD 34–35 billion annually) have gained preferential market access through multiple FTAs with key regions—UAE, Australia, EFTA (Europe), and ASEAN-linked markets. The next frontier is clear: move from signing FTAs to monetising them—turning tariff advantages into orders, realisations, and long-term buyer commitments.

Now, with the India–EFTA Trade and Economic Partnership Agreement (TEPA) in force and investment intent aligned with manufacturing expansion, the Union Budget 2026-27 is well-timed to create the "execution rails" that convert FTA access into measurable export growth. Just as importantly, the industry is watching for momentum on the India–EU FTA: a deal with the potential to meaningfully shift India's apparel competitiveness in one of the world's most valuable consumer markets—especially versus Vietnam and Bangladesh, which benefit from stronger trade linkages and smoother export execution.

Why FTA Utilisation Remains Low
The constraint isn't demand—it's readiness and execution. Key friction points include:
Complex Rules of Origin (RoO) (especially for yarn, fabric, trims)
Fragmented domestic value chains, limiting RoO compliance at scale
High costs for testing, certification, traceability, and ESG compliance
Working capital pressure during buyer onboarding and initial order cycles
Competing sourcing destinations show what works: tight backward integration + predictable trade facilitation = higher conversion of tariff preference into repeat business.
Policy Imperatives for Union Budget 2026-27

1) FTA Execution & Trade Facilitation
Simplify and digitise RoO compliance
Faster issuance and verification of Certificates of Origin
Practical sector playbooks for textiles and apparel exporters
2) Value Chain Strengthening
Incentivise RoO-compliant yarn/fabric/processing capacities
Targeted support for MMF and value-added textiles (where global demand is rising)
Reduce reliance on non-FTA inputs that weaken eligibility
3) Compliance & Sustainability Enablement
Shared infrastructure for testing, traceability, ESG readiness
Budget support for upgrades aligned with evolving buyer regulations (due diligence, product compliance, sustainability reporting)
4) Export Finance & Liquidity Support
Easier pre- and post-shipment credit for FTA-linked orders
Faster settlement of RoDTEP / ROSCTL
Working capital support for buyer onboarding and scale-up
5) Market Activation & Buyer Engagement
Focused buyer outreach in FTA partner countries (and EU readiness programs)
Support for trade fairs, sourcing forums, and B2B platforms
Cluster-based "speed-to-market" initiatives to improve lead times and conversion
Quote from Dr. Mukesh Kansal, Chairman, CTA Apparels

"Union Budget 2026-27 is a crucial moment to convert India's FTAs into real export gains for textiles and apparel. Preferential access alone is not enough—monetisation depends on execution. Low FTA utilisation is largely driven by complex rules of origin, compliance costs, and supply-chain gaps. The Budget should back simplified Rules of Origin processes, stronger domestic value-chain linkages, shared compliance infrastructure, and easier export finance. With the right execution support—and stronger momentum towards the India–EU FTA—FTAs can unlock higher exports, better value realisation, and sustained global competitiveness across the textile and apparel value chain."

User :- Jitendra Bakshi

Email :-secretariat@ctaapparels.com