India set for US zero-tariff textile access like Bangladesh

Indian Commerce & Industry Minister Piyush Goyal says Indian textile exporters will receive the same tariff benefits as Bangladeshi competitors in the US market once an interim trade agreement with Washington is finalised. He told reporters that, as with Bangladesh, India will be able to export certain textile and apparel products at a zero reciprocal tariff rate, subject to raw-material sourcing conditions from the United States.

Goyal said India and the US currently have a framework agreement, and that the detailed terms would appear in the “fine print” when this is converted into an interim pact. He directly linked India’s prospective access to the mechanism announced in a Bangladesh-US joint statement earlier in the week.

Under the Bangladesh-US understanding, Washington has committed to set up a mechanism allowing specified volumes of Bangladeshi textile and apparel imports to enter the US at a zero reciprocal tariff rate. The quota for this preferential access is to be calibrated against exports of US-produced cotton and man‑made fibre textile inputs to Bangladesh, according to the joint statement.

Goyal noted that a similar sourcing requirement would apply to India. He stressed that, as with Bangladesh, the benefits are contingent on purchasing raw materials from the United States and processing them into finished textiles and garments for export back to the US market.

The prospect of parity with Bangladesh has been welcomed by Indian garment manufacturers, who had feared losing US market share after Dhaka secured its quota-based duty-free deal. Goyal framed the planned mechanism as ensuring India “also has the same facility” and access conditions as Bangladesh for eligible products.

On tariffs, the minister said the US has set reciprocal tariffs of 18% on Indian goods, to be reduced from 25%, while reciprocal tariffs on Bangladeshi goods stand at 19%, down from 20% after a revised deal. However, the most-favoured-nation (MFN) tariff on garments in the US is around 16%, which is expected to apply to exports from both India and Bangladesh regardless of the reciprocal tariff levels.

The proposed linkage between duty-free access and sourcing US cotton has triggered unease among Indian cotton farmers. Trade expert Abhijit Das highlighted a structural difference between the two countries, noting that Bangladesh “hardly grows any cotton,” while India is a major producer, with 29.22 million bales of monsoon-sown cotton forecast in 2025-26, only slightly below the previous year’s 29.72 million bales.

Indian farmers’ groups are calling for greater transparency in the negotiations. Kannaiyan Subramaniam, president of the Thalavady Farmers Association, said farmers are being “kept in the dark” while the textile industry is better informed. He warned that easing imports of US cotton could adversely affect a large number of Indian growers.

Rampal Jat, national president of Kisan Mahapanchayat, accused the US of trying to “snatch” India’s cotton market. He said it was essential to fix accountability for not adopting an “appropriate policy” in the trade agreement in a timely manner, reflecting farmer concerns that increased US-origin sourcing requirements could displace domestic cotton.

Goyal has argued that the raw-material sourcing clause “will not adversely impact Indian cotton farmers,” citing what he described as limited US cotton production. At the same time, the government has recently allowed cotton imports at zero duty until December 31 to bolster domestic supplies, leading to an uptick in arrivals and underscoring existing supply-demand pressures.

The emerging India-US mechanism seeks to align trade in raw materials and finished textiles, offering Indian exporters improved access to the US while embedding purchase requirements for American cotton and man-made fibre inputs. As negotiations move from framework to interim agreement, the balance between export competitiveness, sourcing obligations and farmer interests remains a central point of domestic debate.