Mumbai, Maharashtra, India: Negotiations between India and the European Union have reached a crucial stage as both sides intensify efforts to finalize a free trade agreement by the end of this year.

In the wake of steep U.S. import tariffs reaching as high as 50%, Indian textile exporters are actively exploring new opportunities in Europe while providing discounts to existing American buyers to soften the financial impact, according to industry insiders.

In August, President Donald Trump doubled tariffs on Indian imports — among the highest levied on any trading nation — affecting a wide range of goods, including garments, jewelry, and seafood products such as shrimp.

A garment manufacturer based in Mumbai, who requested anonymity pending the signing of export contracts, said his company has begun focusing more on European Union markets. He noted that a swift trade agreement with the EU could significantly increase India’s textile exports.

The trade discussions with the EU are now in their final stages, with negotiators pushing hard to complete the deal before year-end.

The European Union remains India’s top trading partner for merchandise, recording bilateral trade worth $137.5 billion in the fiscal year ending March 2024 — nearly a 90% jump compared to a decade ago.

To tap into this expanding market, Indian exporters are enhancing their facilities to comply with the EU’s stringent requirements related to chemicals, product labeling, and ethical sourcing practices, said several representatives from the textile sector.

Rahul Mehta, chief mentor of the Clothing Manufacturers Association of India, explained that many exporters are modernizing their production systems to meet these higher European standards while simultaneously reducing dependence on the U.S. market.

The United States was India’s largest buyer of textiles and garments in the fiscal year ending March 2025, accounting for nearly 29% of total exports valued at about $38 billion.

However, to retain American clients amid rising costs, several exporters have started offering discounts. Vijay Kumar Agarwal, chairman of Mumbai-based Creative Group — whose U.S. shipments make up 89% of total exports — said the tariff hike is severely affecting operations.

If the high tariffs persist, Agarwal warned, the company might have to lay off between 6,000 and 7,000 of its 15,000 employees and could consider shifting part of its production to Oman or neighboring Bangladesh within the next six months.