India-US deal to offer zero-duty access for garments on Bangladesh-US model: Indian commerce minister
India and the US are expected to finalise the interim trade deal framework by the end of March
Taking a cue from the Bangladesh-US trade deal for concessional duty on garment exports with American yarn and cotton inputs, India said it would seek a similar facility under the India-US bilateral agreement expected to be signed in March.
Indian Commerce and Industry Minister Piyush Goyal told reporters in New Delhi that the deal would include provisions similar to the Bangladesh-US accord, allowing a certain yet-to-be-fixed quantity of Indian textiles and garments to be exported to the US at zero reciprocal duty.
"Bangladesh ko jo mila hai, woh Bharat ko bhi milne wala hai final agreement mein (Whatever Bangladesh has got, India will also get the same in the final agreement)," Goyal said.
Keep updated, follow The Business Standard's Google news channel
His remarks came amid concerns from Indian garment manufacturers and exporters that Indian products could face an 18% disadvantage compared to Bangladeshi exports after Dhaka struck its accord with the US this week.
India and the US are expected to finalise the interim trade deal framework by the end of March.
"Bangladesh has received a benefit under its trade deal with the US of exporting textiles and garments [in quota] at zero reciprocal duty if they purchase raw materials from the US. India has a similar benefit. The fine print of the India-US deal will have details," Goyal said.
Under the zero reciprocal duty provision, the volume of duty-free textile and apparel exports from Bangladesh to the US is determined based on Dhaka's imports of "US-produced cotton and man-made fibre textile inputs."
Bangladesh is the second-largest exporter of textiles and apparel to the US after China.
Officials said the India-US zero-duty provision could give Indian textiles a bigger advantage than Bangladesh, as India's much larger spinning capacity allows higher utilisation of US cotton and potentially a bigger quota.
India's spinning industry is among the largest globally, and Bangladesh is a key importer of Indian yarn.
Indian textile exporters such as Gokuldas Exports, KPR Mills and Arvind Ltd, which saw shares slip up to 7% on Monday following the Bangladesh-US joint statement, recovered and closed up to 4% higher after Goyal's comments.
