New Delhi, February 7 The landmark trade agreement between India and the US is set to open up America's $118 billion global market for textiles, apparel, and home goods, presenting 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% reciprocal tariffs on Indian textile products, including apparel and home goods, will not only eliminate the disadvantage faced by Indian exporters, but will also put them in a better position than most competitors, such as Bangladesh (20%), China (30%), Pakistan (19%), and Vietnam (20%), who have higher reciprocal tariffs, the textile ministry said.
This will alter the market dynamics, as large buyers will undoubtedly re-evaluate their sourcing in light of this agreement, it added.
India and the US announced on Saturday 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% from the current 50%, India will eliminate or reduce 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 agreement will act as a major catalyst, enhancing trade relations between the nations.
"For textile exports, it opens up a $118 billion US global market for textiles, apparel, and home goods. With the US being India's largest export destination, with exports of around $10.5 billion, comprising about 70% apparel and 15% home goods, this represents a major opportunity.
It is expected to play a pivotal role in India achieving its target of $100 billion in exports by 2030. The deal is expected to provide the necessary momentum, with the US contributing more than 1/5th of this target," the ministry said.
The agreement will also enable the industry to be cost-competitive and diversify its risks by sourcing intermediates for the textile sector from the US, it added.