EU–India FTA: What Legal Scrubbing Means for Garment Duty

Although the Ministry of External Affairs has stated that the main negotiating tracks for the India–EU Free Trade Agreement have concluded and the text is undergoing legal scrubbing, import duty rates on Indian garments remain unchanged as of 29 October 2026. European importers must continue paying current duties—principally 9.6% on dresses, kaftans, and skirts and 6.4% on woven scarves under the EU Generalised Scheme of Preferences (GSP), or standard duties of 8% to 12%. The proposed zero-tariff access will not take effect until the agreement is adopted by the Council, formally signed, consented to by the European Parliament, and ratified by both sides.

Negotiations conclude and text enters legal scrubbing

On 2026-10-29, it was reported by The Tribune and LatestLY that the main negotiating tracks for the India–EU Free Trade Agreement (FTA) have concluded, with the treaty text now undergoing legal scrubbing, according to India’s Ministry of External Affairs (MEA). Negotiations between the European Union and India initially began in 2007, were suspended in 2013, and were relaunched in 2022 before formally concluding on 27 January 2026. On 11 September 2026, the European Commission submitted its proposal for a Council Decision on the signing of the agreement to the Council of the European Union (COM(2026) 483). In addition to the trade agreement, both sides are negotiating parallel agreements on investment protection and geographical indications.

Recent diplomatic statements reflect continued political focus on the agreement. On 2026-10-28, DD News confirmed that Radhakrishnan described the proposed pact as the “Mother of All Deals”, hoping it will be signed this year. It was reported by The Tribune on the same day that the German Ambassador stated the agreement’s signing is expected by year-end. Furthermore, it was reported by Revoi.in on 2026-10-28 that External Affairs Minister S Jaishankar affirmed that India looks forward towards the implementation of the FTA with the European Union. In Brussels, it was reported by WION on 2026-10-28 that the European Parliament Foreign Affairs Committee chair expects the trade deal to take effect in 2027. Together, the EU and India represent around two billion people—approximately 25% of global gross domestic product—with bilateral trade currently exceeding €180 billion in goods and services per year, supporting close to 800,000 jobs in the EU.

Current customs duties and VAT on Indian garments

Pending signature and ratification, customs authorities continue to apply existing tariff regimes. For garments arriving from India into Germany, standard duties range from 8% to 12%, while qualifying imports under EU GSP enter at preferential rates of 6.4% to 9.6% (rates verified on 2026-10-28). India remains a standard GSP beneficiary. Under Implementing Regulation (EU) 2025/1909, the European Union suspended GSP preferences for Indian textiles for 2026–2028, but did not suspend GSP for apparel. As a result, Indian apparel continues to receive GSP treatment—carrying a 9.6% duty rather than the standard 12% on most garments, and 6.4% rather than 8% on woven scarves. A renewed GSP framework under Regulation (EU) 2026/1395 applies from 1 January 2027 and will require a fresh list of suspended product sections once published.

To claim GSP rates, the Indian exporter must be registered in the EU Registered Exporter (REX) system and provide a valid statement on origin on the invoice, which the importer’s customs broker submits to customs. In Germany, clothing also incurs the standard 19% import value-added tax (VAT), calculated on the customs value plus duty. EU VAT-registered businesses deduct import VAT as input tax on their VAT returns. While certain member states allow import VAT to be accounted for directly on the tax return under Article 211 of the VAT Directive (such as the Netherlands via an Article 23 licence and Belgium via an ET14000 authorisation), Germany provides a customs deferment account.

Garment Category and Fibre	Standard Duty	Current EU GSP Duty	Proposed FTA Duty (Not Yet in Force)
Women’s dresses (cotton, viscose / rayon, polyester, silk, or linen; woven)	12%	9.6%	0% (expected at entry into force)
Women’s dresses (cotton, viscose / rayon, or polyester; knitted)	12%	9.6%	0% (expected at entry into force)
Women’s kaftans (cotton, viscose / rayon, polyester, silk, or linen; woven or knitted)	12%	9.6%	0% (expected at entry into force)
Women’s skirts (cotton, viscose / rayon, polyester, silk, or linen; woven or knitted)	12%	9.6%	0% (expected at entry into force)
Women’s tops and blouses (cotton, viscose / rayon, polyester, silk, or linen; woven or knitted)	12%	9.6%	0% (expected at entry into force)
Scarves and stoles (cotton, viscose / rayon, polyester, silk, wool, or linen; woven)	8%	6.4%	0% (expected at entry into force)
Scarves and stoles (cotton or wool; knitted)	12%	9.6%	0% (expected at entry into force)

Proposed FTA terms, rules of origin, and ratification steps

The draft EU tariff schedule eliminates customs duties on every garment line on the day the agreement enters into force, offering an expected 0% rate. Across all economic sectors, the treaty is designed to eliminate or reduce 90% of tariffs, yielding an estimated €4 billion in annual duty savings for European exporters and projected to increase EU exports to India by €58 billion annually.

However, duty-free entry under the FTA will require compliance with strict origin rules. The draft origin rule for woven apparel is stricter than the United Kingdom’s origin framework: the fabric must be woven or knitted in either India or the European Union. Garments sewn in India using fabric imported from third countries would not meet this requirement, disqualifying them from the 0% FTA tariff and leaving them on standard rates.

Before any duty reduction can take effect at customs borders, several mandatory institutional steps must be completed:

The Council of the European Union must adopt the decision to sign the agreement.
The European Union and India must officially sign the treaty.
The European Parliament must grant its formal consent.
The Council of the European Union must adopt the decision concluding the agreement.
India must formally ratify the agreement.

No official entry-into-force date has been announced. The agreement cannot apply before signature, European Parliament consent, and ratification by both jurisdictions. If the exact customs treatment or timing for an upcoming consignment is uncertain, check with your customs broker.

Check your own garment

To evaluate current customs rates and VAT calculations for shipments entering Germany, consult our duty guides:

We manufacture women’s dresses, kaftans, skirts and scarves for European fashion brands and retailers, providing complete REX origin documentation with each shipment; Talk to us to plan your production and customs compliance.

Sources

Indicative information from official sources, written 29 October 2026. Rates verified on 29 October 2026 against the official tariffs. It is not a customs ruling; confirm with your customs broker before you rely on it.