India-EU FTA Reshapes Textile Trade with Digital Compliance Mandate

On January 27, 2026, the India–EU FTA removed the 12% MFN tariff on apparel but introduced a mandatory API-linked Digital Product Passport (DPP) system for fiber and yarn exports.

In hubs like Tiruppur and Coimbatore, conventional 30s combed yarn at ₹245/kg faces rejection without Digital Twin verification.

Fully traceable yarn linked via blockchain is earning a 15% Audit Premium, selling at around ₹290/kg.

EU brands are avoiding potential 4% global turnover fines under greenwashing rules, prioritizing compliance over lower raw material costs.

Nearly 20% of MSME spinning units lack the required ₹20–30 lakh digital infrastructure, accelerating consolidation ahead of the 2026 autumn/winter season.