Clothing chiefs in India were celebrating on Tuesday after the European Union agreed to extend compensatory market access to Indian garment exporters after months of talks.

The move follows the EU's decision to grant a dozen countries - Pakistan and 11 Latin American nations - duty-free access under the generalised system of preference (GSP) in return for their fight against drug trafficking.

But threatened with being taken to the World Trade Organisation's dispute settlement body, the EU has now agreed to allow India preferential trade terms that may lead to extra annual apparel exports worth 300 million euros.

Reports in India say the exact details of the concessions are still being worked out between the EU and officials in New Delhi.