Tirupur to Reykjavik: Indian knitwear opens a new Nordic chapter

Knitting machines hum overtime in Tirupur's export zones as a Nordic nation suddenly discovers India's cotton. Iceland's appetite for Indian-made t-shirts has climbed 49.4% to $1.16 million in 2025, propelled by the Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association, which opened zero-tariff corridors across Nordic markets in October.

The surge positions India as the third-largest supplier of cotton t-shirts to Iceland, capturing 14.4% market share in a space dominated by Bangladesh and China. While modest in absolute terms, the growth trajectory signals deeper shifts across the world's 4th largest economy's textile export landscape — particularly as US tariffs of 50% on Indian goods, effective August 27, force manufacturers to pivot toward European markets.

Export Giants Scale Nordic Expansion

Tirupur's textile powerhouses are rapidly recalibrating production lines for Nordic specifications. Arvind Limited, India's largest garment exporter with $1.8 billion in export revenue for FY 2024, has earmarked capacity for EFTA markets as part of its diversification strategy. The company's nearly 50% revenue from exports positions it strategically for the Nordic expansion.

"The TEPA can serve a much bigger purpose than just expand our exports of textile and apparel items to Iceland, Liechtenstein, Norway, and Switzerland."

KPR Mill Ltd., producing over 100 million garments annually, has emerged as another key player targeting EFTA markets. The largest textile conglomerate with facilities for spinning, knitting, processing, and garmenting provides the vertical integration needed for Nordic quality standards. Meanwhile, Eastman Exports Global Clothing, one of India's largest apparel exporters specializing in sustainable fashion and exports to brands like H&M and C&A, has already established Nordic supply chains.

From Cotton Fields to Reykjavik Stores

The Indian cotton t-shirt journey to Iceland begins in the spinning mills of Tamil Nadu and Punjab. Tirupur produces over 90% of India's cotton knitwear exports, with over 500 export production units employing more than 300,000 workers directly. The cluster's integrated ecosystem — from 65% of India's cotton garment exports worth Rs. 18,000 crore, with 80% comprising cotton t-shirts — creates the scale needed for consistent Nordic supply.

From Ludhiana's cotton procurement networks to Tirupur's finishing units, the supply chain feeds Iceland's retail landscape through established European distribution channels. Tirupur supplies to top global brands like Nike, H&M, Tommy Hilfiger, Marks & Spencer, Decathlon, Walmart, and Primark, providing the quality credentials that Nordic buyers demand.

The competitive dynamics favor India's expansion. While Bangladesh leads with 22.7% market share and China holds 18%, India wins on quality, variety, and access to premium cotton, catching up by upgrading factories and targeting higher-value products like branded apparel and sustainable fashion. Turkey and Portugal round out the top five, but neither matches India's production scale or cost competitiveness.

Women's Livelihoods Multiply Across Textile Clusters

The Nordic market expansion creates substantial employment opportunities, particularly for women workers who comprise an estimated 55% of India's textile manufacturing workforce. Using sector employment multipliers, the $1.16 million in t-shirt exports to Iceland supports approximately 140 direct jobs and 232 indirect positions across spinning, weaving, cutting, and finishing operations.

The employment impact extends across multiple clusters. In Tirupur, over 500 export production units employ more than 300,000 workers directly, while the industry attracts a large floating labor population from across Tamil Nadu and neighboring states. Ludhiana's knitwear manufacturers provide additional capacity, creating a distributed employment network that benefits from Nordic market growth.

With 90% of textile operations classified as MSMEs, the export growth creates entrepreneurial opportunities for smaller manufacturers seeking to enter European supply chains. For MSMEs and start-ups, the agreement opens pathways for technology transfer, joint ventures and collaboration with niche technology firms from EFTA countries.

The trajectory looks promising as TEPA creates an investment pathway of USD 100 billion over 15 years, supporting India's 2030 exports ambition of USD 1 trillion in merchandise exports. For Iceland's 366,000 residents, Indian cotton comfort just became more affordable — and accessible.

Data source: Iceland customs data for cotton t-shirts, singlets and similar knitted garments. TEPA trade agreement analysis based on official government releases.