US tariff cuts to give Indian textiles edge over Bangladesh, other competitors: Indian ministry
The deal is also expected to enhance cost competitiveness for Indian manufacturers and allow diversification of risks by enabling sourcing of textile intermediates from the US, says the ministry
India's textile sector is set to gain advantage over competitors such as Bangladesh, Pakistan, China, and Vietnam under the recently announced bilateral trade deal with the United States, the Indian Ministry of Textiles said today (7 February).
Under the interim framework, the US will reduce reciprocal tariffs on all Indian textile products, including apparel and made-ups, to 18%. This not only removes the disadvantage Indian exporters previously faced but positions them ahead of competitors, whose reciprocal tariffs remain higher: Bangladesh (20%), China (30%), Pakistan (19%), and Vietnam (20%), the ministry said.
"This agreement is likely to reshape market dynamics, as major buyers are expected to reconsider their sourcing strategies in light of the tariff reduction," the ministry added.
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It stated that the deal is also expected to enhance cost competitiveness for Indian manufacturers and allow diversification of risks by enabling sourcing of textile intermediates from the US.
This, in turn, would support value-added textile production, expand India's manufacturing base, and boost exports, the ministry noted.
The ministry highlighted that the interim agreement would generate additional employment and attract investment from US entities, describing the framework as "a major catalyst" for strengthening textile trade relations between the two countries.
For Indian textile exports, the agreement opens access to the $118 billion US market for textiles, apparel, and made-ups. The US already accounts for around $10.5 billion of India's textile exports, comprising approximately 70% apparel and 15% made-ups.
The ministry said the deal is expected to play a key role in India reaching its $100 billion export target by 2030, with the US projected to contribute over one-fifth of this target, providing crucial momentum for the sector.
Indian Commerce Minister Piyush Goyal also highlighted the broader benefits of the deal.
Speaking to reporters, he said, "The agreement provides India with a competitive advantage over neighbouring countries and will provide a lot of help to our exporters."
Goyal noted that India's exports worth about $44 billion to the US will enter the American market at zero reciprocal tariffs under the first phase of the bilateral agreement, expected to be signed by mid-March.
He added that India will offer duty concessions on a range of American goods, while sensitive agricultural and dairy products will remain fully protected. "Certain concessions will also be quota-based, such as soybean oil, to allow limited duty-free access for US exports."
The tariff concessions offered by India cover products including wines and spirits, dried distillers' grains, red sorghum for animal feed, tree nuts, soybean oil, fresh and processed fruit, cosmetics, chemicals, certain medical devices, and computer-related products.
Meanwhile, sensitive sectors such as milk, cheese, wheat, rice, maize, soy, poultry, ethanol (fuel), tobacco, certain vegetables, and meat from the US will not receive any duty concessions, ensuring protection for domestic producers.
