Gokaldas deepens Europe push as India-EU duty-free trade nears

Gokaldas Exports, the garment maker that supplies Gap, Carhartt and JCPenney, expects Europe to climb from about 15% of its exports to 25% to 30% in three to five years¹. Its US share, now about 69%, will moderate, vice-chairman and managing director Sivaramakrishnan Ganapathi told Reuters¹.

Ganapathi said the company is holding talks with major European retailers "in preparation for duty-free trade" and is adding capacity in India rather than moving production abroad¹. Gokaldas plans to spend 1.25 billion rupees, or $13.2 million, on capacity and upgrades in fiscal 2027¹.

The reallocation is not confined to one supplier. R Gopalakrishnan, chairman of Tiruppur knitwear exporter Royal Classic Mills, said its US exposure has fallen from 85% to 40% in 15 months, and the company has no plans to reverse that yet⁶. Gokaldas names Pearl Global Industries and KPR Mill as peers¹.

What the FTA actually changes

EU duties on Indian textiles, apparel, leather and footwear run at up to 12% to 17%, and the agreement would remove them². Piyush Goyal has said 93% of Indian shipments are expected to get duty-free access to the 27-member bloc⁴. Jefferies put it slightly differently. It said India secured preferential access to 97% of EU tariff lines, covering 99.5% of trade value. It added that about 91% of Indian exports to the EU would face no import duty once the deal enters into force².

Because duty is charged as a share of a shipment's customs value, a 12% rate is worth 12% of the value of the goods at the EU border. The percentage saving is the same for any qualifying order. The cash amount grows with shipment value, and relief matters most where garment margins are thin.

Staging matters as much as the headline cut. Tariff liberalisation is expected to be phased over several years rather than granted in full on day one². Goyal has separately said Indian textile exports could grow from $7 billion to $30 billion to $40 billion "very quickly" under the deal². That is a forecast, not an outcome.

The origin test decides who banks it

Rules of origin are the criteria that fix a product's "economic nationality"⁷. For a garment, the question is how much of the manufacturing chain, from yarn and fabric to cutting and stitching, happened inside India. A consignment that fails the test pays the full most-favoured-nation duty even though India is a signatory.

The operating detail is not public yet. Reporting on the pact rests on official briefings, and the final legal text and its annexes were still to be published². FICCI secretary general Anant Swarup said industry needs "practical, product-specific guidance on tariff concessions, rules of origin, regulatory requirements"⁵. Equirus Securities analyst Ronak Shah described the opportunity as "subject to implementation, product coverage and origin requirements"¹.

Swarup also flagged the standards side. EU rules on product safety, traceability, carbon emissions and CBAM, the carbon border levy, are harder for small suppliers to meet⁵. For a buyer, that means the cheapest Indian quote may not be the one that clears EU compliance.

Signature, ratification and the order book

India and the EU concluded negotiations on 27 January 2026^8, 3. On 11 September 2026 the European Commission sent proposals to the Council for the signature and conclusion of the agreement, seeking authorisation for signature³. It still needs Council approval, consent from the European Parliament and Indian domestic approvals².

Goyal said on 22 October that the agreement is expected to be signed before the end of the year and could become operational four to five months after signature⁴. The report on FICCI's briefing said the deal is expected to be signed in December and may enter into force next year⁵.

The Port of Rotterdam's chief executive, Boudewijn Siemons, said he has "very high expectations" from the pact and that Europe is looking forward to more business with India⁹. The report restated the January conclusion of talks and the expectation of a year-end signing; his remarks added no new step⁹.

The timing gap is the practical problem. On Goyal's timetable, a year-end signature would be followed by four to five months before the deal applies⁴. Gokaldas is already talking to European retailers while that clock runs¹.

What buyers should do now

EU sourcing teams should start vendor qualification in India before the tariff line changes, not after. Ask candidates where yarn and fabric are made, whether they can document origin, and which factory will run your order, because those answers decide eligibility later^5, 7. Build the compliance file early, since testing, certification and traceability are the slow parts⁵.

The US side argues for a different hedge. The interim deal with Washington is stalled. Washington currently applies an additional 10% levy on Indian exports under Section 301, and New Delhi will not accept the 18% rate in the February framework¹⁰. Sources told BusinessLine that India is inclined to wait until the US mid-term elections are over¹⁰.

Meanwhile, Indian suppliers are getting pickier. Gokaldas said its US spring and summer 2027 orders were stronger than the 2026 holiday season, when its shipments from India rose 3% to 4% from a year earlier¹. US apparel imports from all origins fell 7% to $49.08 billion in January to August¹. A shrinking US pool plus a new duty-free option in Europe gives Indian factories more reason to price and allocate on their terms.

What to watch

Watch the signature, expected around December, and the Council and Parliament steps before it^3, 2. Watch the published origin annex, which will tell buyers which garments qualify². And watch EU demand itself. India's exports to the EU fell 4.57% to $72.4 billion in 2025-26, about 17% of its merchandise shipments⁵. Duty-free access does not create orders on its own, which is the point FICCI made about converting market access into market penetration⁵.