India-US agreement reduces tariffs, unlocking a $118 billion textile market, boosting exports and strengthening India's global textile trade position

The landmark trade agreement between India and the US is set to open up America's $ 118 billion global imports market of textiles, apparels and made ups, a "major opportunity" for India's textile industry, the government said on Saturday.

Notably, the US is the top market for India's textile exports.

The 18 per cent reciprocal tariffs on Indian textiles products including apparel and made-ups will not only remove the disadvantage that Indian exporters had, but would place them in a better position than most competitors like Bangladesh (20 pc), China (30 pc), Pakistan (19 pc) and Vietnam (20 pc), who have higher reciprocal tariffs, the textile ministry said.

This would alter the market dynamics as large buyers would surely relook at their sourcing in the light of this agreement, it added.

India and the US on Saturday announced that they have reached a framework for the first phase of the bilateral trade agreement under which both sides will reduce import duties on a number of goods to boost two-way trade.

The framework reaffirms the two countries' commitment to the broader US-India Bilateral Trade Agreement (BTA) negotiations, launched by President Donald Trump and Prime Minister Narendra Modi on February 13, 2025, according to a joint statement.

While the US will reduce tariffs on Indian goods to 18 per cent from the present 50 per cent, India will eliminate or cut down import duties on all US industrial goods and a wide range of American food and agricultural products, including dried distillers' grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits.

The Ministry of Textiles stated that the pact will act as a major catalyst enhancing the textile trade relations between the nations.

"For textiles exports, it opens up a $ 118 billion US global imports market of textiles, apparels and made ups. With the US being India's largest export destination of around $ 10.5 billion exports, comprising around 70 per cent apparel and 15 per cent made ups, this is a major opportunity.

It is expected to play a pivotal role in India achieving its intended target of $ 100 billion exports in 2030. The deal is expected to provide the requisite momentum, with US to contribute to more than 1/5th of this target," the ministry said.

The agreement would also enable the industry to be cost-competitive and diversify its risks by sourcing intermediates for the textiles sector from the US, it added.