US President Donald Trump’s approach to tariff reciprocity poses significant economic challenges, not just for India but for the global economy. Nevertheless, the Indian textile sector views this as a pivotal opportunity to enhance its presence in the US textile and apparel market. The Confederation of Indian Textile Industry (CITI) has advocated for a Zero-for-Zero trade agreement in textiles and apparel with the United States, noting that current tariff rates for these products are largely comparable between the two nations.
CITI emphasizes that India has a unique chance to expand its market share in the US, especially in light of recent US policy changes that have increased tariffs on primary competitors such as China, Mexico, and Canada. To leverage this situation effectively, India should pursue a Zero-for-Zero trade agreement concerning textiles and apparel (T&A), with the inclusion of necessary safeguards for sensitive items.
In a recent statement, CITI highlighted, “A zero-duty structure would create a level playing field for Indian exporters against Vietnam, which enjoys duty concessions. With reduced tariffs, India’s T&A exports to the US could potentially soar to $16 billion within the next three years.”
The organization further indicated that such an agreement would enhance India’s share of textile and apparel shipments within the total US imports. Given India’s reliance on US cotton imports, implementing a duty-free access mechanism with quota safeguards could facilitate a balanced trade approach. Strategic negotiations, combined with collaboration between the industry and government, position India favorably to capitalize on this transformative opportunity in the US T&A market.
The United States stands as the world’s second-largest market for T&A, accounting for 15% of global T&A exports. For India, the US is a critical export destination, representing 28.5% of its total T&A exports between January and November 2024.
Currently, India ranks as the third-largest supplier of T&A products to the US, trailing only China and Vietnam, with a 10.8% share of total US T&A imports valued at $118.4 billion. In contrast, China maintains a leading position with a 25.6% share. Notably, a significant trend is emerging: while US imports from China have seen a compound annual growth rate (CAGR) decline of 9.4% over the last five years (2020 to 2024), imports from India have grown at a CAGR of 9.1% during the same period. This indicates a promising opportunity for India to fortify its standing in the US market.
The trade balance in T&A between the US and India strongly favors India, with US T&A imports from India reaching approximately $10.8 billion in 2024, compared to only $0.41 billion in US exports to India. It’s noteworthy that India primarily imports fiber products from the US, with cotton constituting 50.6% of total US T&A exports to India. Conversely, India’s exports to the US are predominantly comprised of apparel and home textiles.
During a government meeting focused on tariff issues, Atul S. Ganatra, president of the Cotton Association of India (CAI), proposed that to mitigate the risk of higher tariffs on Indian garment exports, India should permit duty-free cotton imports of up to 1.5–2 million bales (170 kg each) from the US. His suggestion received positive feedback from all participants, including industry representatives.
Ganatra additionally stated that if required, the Indian government could raise import duties on cotton from other nations to safeguard domestic farmers. The government estimates indicate a decline in Indian cotton production this season to 30 million bales, attributed to a 10% reduction in cotton sowing. Moreover, given that China has imposed a 15% duty on US cotton, this presents an opportune moment for India to permit duty-free cotton imports from the US. A trade arrangement allowing Indian garments to enter the US duty-free while facilitating US cotton to enter India without duties would create a mutually beneficial scenario for both nations.
