India's Apparel, Footwear, and Chemicals Set for Export Boost in US Under New Trade Agreement

India's exports in sectors like apparel, footwear, plastics, and home decor are set to benefit significantly in the US market. This follows a reduction in tariffs under an interim trade agreement between India and the US. Both nations have agreed to lower import duties on various goods to enhance bilateral trade. The US will cut tariffs on Indian products to 18 per cent.

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The US has removed the punitive 25 per cent additional duty on Indian goods. The reciprocal tariffs of 25 per cent are also expected to be reduced to 18 per cent soon. This reduction applies to Indian goods such as textiles, leather, plastic, organic chemicals, and certain machinery. Additionally, duties will decrease on gems, diamonds, and aircraft parts.

Impact on Labour-Intensive Sectors

India's labour-intensive sectors faced challenges due to the steep 50 per cent tariffs imposed by the US from August 27. Although these sectors diversified exports to Europe and Africa, the US remained a key market. Apparel Export Promotion Council (AEPC) chairman A Sakthivel stated that eliminating tariffs will significantly enhance the global competitiveness of India's textiles and apparel sector.

Ready-made garment exports increased slightly by 2.36 per cent to USD 11.6 billion during April-December 2025-26. The US is a primary market for this sector. Ramesh Kumar Juneja, chairman of the Council for Leather Exports (CLE), mentioned that the deal could boost exports by about 30 per cent in the first year after implementation.

Boost for Leather and Footwear Exports

Currently, India's exports to the US are around Rs 15,000 crore, employing approximately 42 lakh people. The agreement is expected to provide a significant boost. Leather and footwear exports saw a slight decline of 0.23 per cent to USD 3.3 billion during April-December 2025-26.

The Gems and Jewellery Export Promotion Council (GJEPC) highlighted that India's diamond sector suffered over the past year. Exports of cut and polished diamonds to the US dropped by over 60 per cent from USD 3.64 billion in April–December 2024 to USD 1.45 billion in April–December 2025 due to tariff impacts.

Expected Benefits for Various Sectors

The GJEPC expressed confidence that once the Interim Agreement concludes, diamonds and coloured gemstones will receive full zero-duty treatment, restoring competitiveness in this crucial market. Commerce and Industry Minister Piyush Goyal noted that other Indian exports like machinery parts, aircraft parts, auto parts, coins, platinum, essential oils, home decor items, inorganic compounds, paper, plastic, and natural rubber will benefit from zero reciprocal tariffs.

India will also receive a preferential tariff rate quota for automotive parts as part of this agreement. This development is anticipated to strengthen India's position in various export markets by reducing costs and enhancing competitiveness.

With inputs from PTI