India-US trade deal likely to offer conditional zero duty for apparel exports: Piyush Goyal

India’s textile and apparel sector could secure zero-tariff access to the United States — similar to concessions extended to Bangladesh — if Indian manufacturers use American cotton, Commerce Minister Piyush Goyal has indicated, signalling a potentially significant shift in bilateral trade dynamics.

The development comes as New Delhi and Washington work toward signing an interim trade agreement expected around March, aimed at easing tariff barriers while protecting sensitive domestic sectors, particularly agriculture.

Commerce Minister Piyush Goyal said cotton imports meant for processing will attract nil duty under the proposed India-US trade deal, clarifying that the provision is designed to secure supply-chain advantages without undermining domestic producers.

He noted that India would gain cotton-related benefits similar to those seen in the US-Bangladesh arrangement, while emphasising that the scale of US cotton production remains lower than India’s and that the policy is structured to ensure Indian cotton farmers are not adversely affected.

Under the proposed arrangement, US reciprocal tariffs on Indian textile and apparel exports would be reduced to 18%. 

Indian exporters had been uneasy after the United States announced an Agreement on Reciprocal Trade with Bangladesh, lowering reciprocal tariffs on Bangladeshi imports to 19% and allowing select textile and clothing items to enter the US duty-free.

Those concessions apply particularly to goods made using American cotton and man-made textiles, with volumes linked to Bangladesh’s imports of US textile inputs.

Under the trade deal, the Most Favoured Nation (MFN) tariff will continue to apply because the concession is limited to the reciprocal portion of the duty structure. As a result, officials estimate that the effective tariff on garments made with US cotton could fall to roughly 3%.

The structure mirrors elements of Washington’s recent trade engagement with Bangladesh, where tariff relief has been linked to supply-chain integration with US raw materials.

Meanwhile, Goyal emphasised that the trade deal agreement safeguards India’s agricultural sector, countering criticism from political opponents.  

“Around 90% to 95% of farm products produced in India have been left out of the trade deal, ensuring the interests of farmers are protected,” he said, responding to concerns raised by Lok Sabha Leader of Opposition Rahul Gandhi.  

Goyal added that beyond textiles, Indian agricultural goods are also expected to benefit from ongoing trade negotiations with the United States, European Union and the United Kingdom. The minister also rejected claims that Bangladesh had negotiated more favourable terms.  

Bangladesh, whose clothing sector accounts for over 80% of export earnings and employs roughly four million workers, agreed in return to expand market access for a range of American products — including chemicals, medical devices, machinery, automobiles and parts, as well as agricultural goods such as dairy, poultry, fruits and nuts.