India-US trade pact may open $118 billion market for textiles; tariff cut to improve India’s competitiveness

The India-US trade agreement is expected to unlock America’s $118 billion global imports market for textiles, apparel and made-ups, offering a major opportunity for India’s textile sector, the government said on Saturday.

US remains the largest market for India’s textile exports, and the new tariff framework is expected to strengthen India’s positioning in global textile supply chains, PTI reported.


The Ministry of Textiles said the 18 per cent reciprocal tariff on Indian textile products, including apparel and made-ups, will remove the earlier disadvantage faced by Indian exporters and place them in a better position than competitors such as Bangladesh (20 per cent), China (30 per cent), Pakistan (19 per cent) and Vietnam (20 per cent).

The ministry said the development is likely to reshape sourcing strategies of global buyers.

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

India and the US have announced a framework for the first phase of the bilateral trade agreement, under which both countries will reduce import duties on several goods to boost two-way trade.

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

Under the framework, the US will cut tariffs on Indian goods to 18 per cent from 50 per cent. In return, India will eliminate or reduce duties on a full range of US industrial goods and several agricultural and food products, including dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits.

The textiles ministry said the agreement would act as a major catalyst for strengthening textile trade ties between the two countries.

“For textiles exports, it opens up a USD 118 billion US global imports market of textiles, apparels and made ups. With the US being India's largest export destination of around USD 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 USD 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 ministry added that the agreement would also help the sector become more cost-competitive and enable diversification of supply chains by sourcing intermediates for the textile industry from the US.