Commerce Minister Piyush Goyal has indicated that India may soon secure zero-duty access for textile exports to the United States, potentially matching a tariff relief arrangement currently benefiting Bangladesh. The move is expected to ease concerns among Indian exporters facing competitive pressure in the US market.
According to industry sources, Goyal conveyed during a meeting with textile industry leaders at Vanijya Bhawan on Wednesday that India is exploring a similar arrangement with the US administration. A trade deal is anticipated to be finalised by the end of March.
Under preliminary tariff guidelines issued by the US administration, countries that use at least 20 per cent US-origin raw materials in the import value of finished products may qualify for zero-duty access when exporting those goods to the US. Industry representatives noted that this provision is not exclusive to Bangladesh and could apply to India as well.
“The minister assured us that India will also consider a similar deal. This means there will be no worry about losing our market advantage to Bangladesh in the US, or about losing cotton exports to Bangladesh,” said a source present at the meeting.
Cotton Trade Dynamics
The potential US arrangement had triggered speculation over its impact on India’s cotton exports to Bangladesh. Bangladesh imports around 8.5 million bales of cotton annually to support its spinning mills, sourcing supplies primarily from Brazil, India and African nations. It has not been a significant importer of US cotton in recent years.
India exports approximately 1.2 million bales of cotton annually to Bangladesh. With an annual production of around 37 million bales and imports of nearly 5 million bales to bridge domestic supply-demand gaps, India is not considered surplus in cotton availability.
Bangladesh’s cotton yarn production remains insufficient to meet the needs of its large garment manufacturing sector. As a result, the country continues to import significant volumes of yarn and fabrics, while also expanding its footprint in man-made fibre production.
Growth Prospects Under FTAs
Industry experts believe India is well-positioned in the evolving trade environment. With free trade agreements (FTAs) signed with the United Kingdom and the European Union, and a US trade pact expected soon, India’s textile and apparel exports are projected to witness substantial growth.
“As these FTAs come into effect, capacity expansion in spinning, weaving and processing will accelerate. This will increase domestic cotton consumption and tighten supply,” an industry source said.
Given the limited scope for immediate increases in cotton productivity or acreage, India may in fact need to increase cotton imports in the coming years rather than reduce them. Experts suggest this scenario could benefit Indian cotton farmers by improving farm realisations and encouraging expansion of cultivation areas.
The anticipated US trade arrangement, if finalised, is expected to reinforce India’s competitive standing in global textile markets while safeguarding both export interests and domestic cotton producers.
