India-US Trade Agreement Unlocks $118 Billion Textile Market, Boosting Export Competitiveness
The Indian government announced on Saturday that the newly established trade framework with the United States is poised to unlock America's vast $118 billion global imports market for textiles, apparel, and made-ups. This development presents a monumental opportunity for India's textile sector, which has long sought enhanced access to international markets.
Strengthening India's Position in Global Supply Chains
The United States remains the largest export destination for Indian textiles, with current exports valued at approximately $10.5 billion. This figure comprises around 70% apparel and 15% made-ups. The new reciprocal tariff framework, which sets duties at 18% for Indian textile products, is expected to significantly strengthen India's positioning within global textile supply chains.
This tariff adjustment removes a previous disadvantage faced by Indian exporters, placing them in a more favorable competitive position compared to key rivals. Competitor nations face higher tariffs: Bangladesh at 20%, China at 30%, Pakistan at 19%, and Vietnam at 20%.
The Ministry of Textiles emphasized that this development is likely to reshape the sourcing strategies of major global buyers. "This would alter the market dynamics as large buyers would surely relook at their sourcing in the light of this agreement," the ministry stated.
Details of the Bilateral Trade Framework
India and the United States have announced the framework for the initial phase of a comprehensive bilateral trade agreement. Under this arrangement, both nations will reduce import duties on a wide array of goods to stimulate two-way trade. The framework also reaffirms a mutual commitment to the broader US-India Bilateral Trade Agreement (BTA) negotiations, which were formally launched by US President Donald Trump and Prime Minister Narendra Modi on February 13, 2025.
Key provisions of the framework include:
- The United States will reduce tariffs on Indian goods to 18%, down from the previous rate of 50%.
- In reciprocal measures, India will eliminate or substantially reduce duties on a full spectrum of US industrial goods.
- India will also lower tariffs on several American agricultural and food products, including:
- Dried distillers' grains
- Red sorghum for animal feed
- Tree nuts
- Fresh and processed fruits
- Soybean oil
- Wine and spirits
Catalyst for Growth and Export Targets
The Ministry of Textiles described the agreement as a major catalyst for fortifying textile trade relations between the two nations. It opens direct access to the $118 billion US import market for textiles, apparel, and made-ups.
This deal is projected to play a pivotal role in helping India achieve its ambitious export target of $100 billion by 2030. The United States is expected to contribute more than one-fifth of this target, providing the necessary momentum for sectoral growth.
Furthermore, the agreement will enhance the cost-competitiveness of the Indian textile sector and enable diversification of supply chains. This includes sourcing intermediates for the textile industry from the United States, fostering a more integrated and resilient production ecosystem.
The strategic tariff reduction not only levels the playing field but also positions India as a more attractive sourcing hub for global apparel brands and retailers, potentially redirecting significant trade flows in the coming years.
