India will receive concessional duty access for garments made using American yarn and cotton under the proposed trade agreement with the United States, similar to benefits currently available to Bangladesh, Commerce and Industry Minister
Piyush Goyal said on Thursday.
The US has reduced reciprocal tariffs on Bangladeshi goods to 19%, though garments attract zero duty only if they are manufactured using US cotton and man-made fibres, PTI reported.
At present, a Bangladeshi garment faces a 31% levy — comprising 12% most-favoured nation duty plus 19% reciprocal tariff. If US fibres are used, the duty falls to 12%.
"Bangladesh ko jo Mila hai, wo Bharat ko bhi milne wala hai final agreement me (Whatever Bangladesh has got, India will also get the same in the final agreement," Goyal told reporters.
He said the provision will be included in the fine print of the India-US pact.
The minister explained that if Indian companies procure yarn forward and cotton forward from the US, manufacture garments and export them to the US, those products would also get duty-free access, similar to Bangladeshi firms.
That provision exists in the US-Bangladesh agreement, and "it will be in our agreement also", he said, adding that the arrangement will not impact Indian cotton farmers.
The US has limited cotton production and exports about $5 million worth of cotton, while India is targeting $50 billion, he said.
In trade agreements, yarn forward and cotton forward are rules of origin (RoO) that require specific production stages within the free trade area to qualify for duty concessions. These rules ensure garments use materials sourced from partner countries, thereby strengthening regional manufacturing.
Timeline for implementation and raw material imports
The benefit for India’s apparel sector will come into effect after India and the US sign the legal agreement for the interim trade deal, expected by mid-March.
India and the US have already finalised a framework for the first phase of the bilateral trade agreement, which is likely to be implemented in March.
Goyal said there will be no quota on the import of raw materials such as cotton.
He added that US businesses are increasingly viewing India as a trusted partner.
The minister said most agricultural products grown by Indian farmers — including dairy, cereals, poultry, soyameal, maize, most fruits and vegetables, ethanol, tobacco, many pulses and millets — are outside the scope of the trade deal.
"Around more than 90-95 per cent of the products grown by farmers are out of the US trade deal," Goyal said while responding to opposition allegations that India has conceded a large part of its agricultural market.
"What India needs and what we import even now and items that will not hurt farmers in India in any way, only those items have been opened in a calibrated manner after careful consideration. This will also benefit India in a way and farmers also," he added.
The minister’s remarks come after Leader of Opposition Rahul Gandhi alleged that the interim India-US trade deal was a "wholesale surrender", claiming that India’s energy security and farmers’ interests had been compromised.
Goyal said the Congress leader should apologise to the people of India.
Separately, speaking at a Medtech, innovation and startup event, Goyal said India’s free trade agreements would provide significant concessional-duty market access to the domestic medical devices sector.
In certain FTAs, Indian medical devices will receive duty concessions, he said.
"We are opening developed markets through the nine FTAs, which cover 38 countries with rich people and high per capita incomes," the minister said.
He suggested exploring land in states such as Rajasthan and Uttar Pradesh for developing a medtech zone similar to the Andhra Pradesh MedTech Zone (AMTZ).
Goyal added that the National Industrial Corridor Development Corporation (NICDC) could consider reserving 50-100 acres of land for medical device manufacturing units.
Commenting on the US-Bangladesh arrangement, Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said the commerce minister had indicated that India is expected to sign the agreement with the US soon.
He added that benefits similar to those extended to Bangladesh’s textile sector are likely to be extended to India as well.