India-US Trade Agreement Unlocks USD 118 Billion Textile Market for Indian Exports

The recent trade agreement between India and the US is poised to significantly impact India's textile industry by opening up the US's USD 118 billion global imports market for textiles, apparel, and made-ups. The US remains the largest market for Indian textile exports, presenting a substantial opportunity for growth, as stated by the government on Saturday.

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India and the US have announced a framework for the first phase of their bilateral trade agreement. This framework involves reducing import duties on various goods to enhance two-way trade. The agreement reaffirms both countries' commitment to broader negotiations under the US-India Bilateral Trade Agreement (BTA), initiated by President Donald Trump and Prime Minister Narendra Modi on February 13, 2025.

Textile Industry Benefits

The Ministry of Textiles highlighted that this pact will serve as a significant catalyst in strengthening textile trade relations between the two nations. With the US being India's largest export destination, accounting for approximately USD 10.5 billion in exports, this deal opens up a major opportunity for growth in textiles, apparel, and made-ups.

The agreement will eliminate the 18 per cent reciprocal tariffs on Indian textile products, including apparel and made-ups. This change will remove the disadvantage faced by Indian exporters and place them in a more favourable position compared to competitors like Bangladesh, China, Pakistan, and Vietnam, who face higher reciprocal tariffs.

Market Dynamics Shift

This reduction in tariffs is expected to alter market dynamics significantly. Large buyers are likely to reconsider their sourcing strategies in light of this agreement. The Ministry of Textiles noted that this development would enable the industry to be more cost-competitive and diversify its risks by sourcing intermediates from the US.

The deal is anticipated to play a crucial role in helping India achieve its target of USD 100 billion in exports by 2030. The US is expected to contribute more than one-fifth of this target, providing the necessary momentum for growth.

Broader Trade Implications

As part of the agreement, the US will reduce tariffs on Indian goods from 50 per cent to 18 per cent. In return, India will eliminate or reduce import duties on all US industrial goods and a wide range of American food and agricultural products. These include dried distillers grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine, and spirits.

This comprehensive trade agreement is set to enhance economic ties between India and the US while providing significant benefits to India's textile industry. By opening up new markets and reducing tariffs, both countries aim to boost their bilateral trade relations further.

With inputs from PTI