US trade deal opens up $118B market for India's textiles
What's the story
The recent trade agreement between India and the US has opened up a massive opportunity for India's textile industry. The deal gives access to America's $118 billion global imports market of textiles, apparel, and made-ups. This is especially significant as the US is already India's largest export destination in this sector, with exports worth around $10.5 billion annually.
Trade benefits
Reduced tariffs will help Indian exporters
The trade pact includes a reduction of reciprocal tariffs on Indian goods, including apparel and made-ups, from 50% to 18%. This is expected to level the playing field for Indian exporters against competitors like Bangladesh (20%), China (30%), Pakistan (19%), and Vietnam (20%). The Confederation of Indian Textile Industry's chairman Ashwin Chandran said this move will allow India's textile and apparel exports to effectively compete in the US market.
Trade facilitation
Addressing non-tariff barriers to trade
The trade agreement also seeks to address non-tariff barriers to trade, reducing compliance burdens and procedural delays. This is expected to speed up the movement of goods into the US market. A Sakthivel, chairman of the Apparel Export Promotion Council (AEPC), welcomed this development as a way to further facilitate Indian exports in textiles and apparel.
Tariff reduction
Broader category of goods with reduced tariffs
The US has also agreed to reduce tariffs on a broader category of Indian goods from 50% to 18%. In return, India will eliminate or cut down import duties on all US industrial goods and a wide range of American food and agricultural products. These include dried distillers' grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits.
Export goals
Ministry of Textiles welcomes the trade agreement
The Ministry of Textiles has said that the trade pact will be a major catalyst in boosting textile trade relations between India and the US. The deal is expected to play a pivotal role in helping India achieve its target of $100 billion in exports by 2030. The ministry also said that the agreement would make the industry cost-competitive and allow it to diversify risks by sourcing intermediates for textiles from America.