Historic Interim Agreement Slashes US Tariffs, Gives India Edge Over Bangladesh, Vietnam, China
Cost Competitiveness, Supply Chain Diversification, and Job Creation on the Horizon
NEW DELHI — India and the United States have finalized a landmark interim trade framework, significantly reducing reciprocal tariffs on Indian textiles, apparel, and made-ups to just 18%. Announced following high-level negotiations and welcomed by the Ministry of Textiles, this deal marks a major turnaround from previous higher duties and positions Indian exporters for stronger competitiveness in the massive US market, Govt said in a statement.
US Remains Top Destination – $10.5 Billion (≈ ₹89,250 Crore) in Current Textile Exports Set to Surge
In a statement Union Govt said that the United States continues as India’s largest market for textiles and apparel, with existing exports valued at around $10.5 billion (approximately ₹89,250 crore at current exchange rates) annually — including roughly 70% apparel and 15% made-ups. The agreement unlocks direct access to the US’s $118 billion (≈ ₹10,03,000 crore) global imports market for textiles, apparels, and made-ups, providing a pivotal opportunity to accelerate growth toward India’s national target of $100 billion (≈ ₹8,50,000 crore) in textile exports by 2030, with the US expected to drive over one-fifth of that goal.
18% Reciprocal Tariff Delivers Clear Competitive Advantage Over Rivals
The new 18% reciprocal tariff across all textile products eliminates long-standing disadvantages for Indian exporters and places them ahead of key competitors:
- Bangladesh: 20%
- China: 30%
- Pakistan: 19%
- Vietnam: 20%
This tariff relief is anticipated to influence major global buyers to shift sourcing toward India, redirecting orders and expanding market share due to improved cost-effectiveness and quality, Govt said in a statement.
Cost Competitiveness, Supply Chain Diversification, and Job Creation on the Horizon
Govt said in a statement, The deal enhances overall cost competitiveness by allowing easier sourcing of intermediates and value-added inputs from the US, paving the way for higher-value textile manufacturing in India. It supports export diversification, attracts potential investments from US companies, and is projected to generate significant new employment in labor-intensive textile clusters across the country.
Ministry Hails Deal as “Major Economic Game-Changer” for Sector Growth
The Ministry of Textiles has described the agreement as a “major economic game-changer,” emphasizing its role in strengthening bilateral trade ties and fostering resilient, mutually beneficial economic cooperation. As an early milestone in ongoing Bilateral Trade Agreement (BTA) talks launched in 2025, the interim framework sets the stage for deeper integration, with formal signing expected soon.
Industry Leaders Optimistic – Revival of Orders and Long-Term Export Momentum
Stakeholders from bodies like the Confederation of Indian Textile Industry (CITI) and Apparel Export Promotion Council (AEPC) have welcomed the development, noting it restores fair competition for Indian cotton-based and other textiles in the US after recent disruptions. The deal is seen as a catalyst for renewed buyer confidence, revived orders, and sustained sector expansion amid shifting global trade patterns.
Key Facts at a Glance
| Key Fact | Details |
|---|---|
| Agreement Type | India-US Interim Trade Framework (part of ongoing Bilateral Trade Agreement talks) |
| Effective Tariff on Indian Textiles, Apparel & Made-Ups in US | 18% (reciprocal, down from higher punitive levels) |
| US Market Size for Textiles/Apparel/Made-Ups Imports | $118 billion (≈ ₹10,06,000 crore at ~85 INR/USD avg; current rates ~90-91 INR/USD) |
| India’s Current Textile Exports to US | ~$10.5 billion annually (≈ ₹89,250–95,550 crore) – 70% apparel, 15% made-ups |
| India’s 2030 Textile Export Target | $100 billion (≈ ₹8,50,000–9,10,000 crore) |
| Expected US Contribution to Target | Over 1/5th (more than 20%) |
| Competitive Edge vs Rivals | India at 18%; Bangladesh 20%, China 30%, Pakistan 19%, Vietnam 20% |
| Additional Benefits | Easier sourcing of intermediates from US, higher-value production, job creation, US investments |
| Ministry Description | “Major economic game-changer” for the sector |
| Announcement Date | February 2026 (effective immediately for tariff relief) |
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