India will receive concessional duty access for garments made using American yarn and cotton under the proposed interim trade agreement with the United States, Commerce and Industry Minister Piyush Goyal said on Thursday.
The benefit will mirror the arrangement currently available to Bangladesh, allowing Indian garment manufacturers to import US-origin raw materials, process them domestically, and re-export finished products to the US at concessional or zero duty.
“Whatever Bangladesh has got, India will also get in the final agreement,” Goyal said on the sidelines of a startup event, adding that the framework for the first phase of the India-US bilateral trade agreement has been finalised and is expected to be implemented in March.
No quota on cotton imports
Under the proposed arrangement, there will be no quota on the import of US cotton and yarn for re-export-linked manufacturing. Indian companies using American raw materials to produce garments for shipment back to the US will receive duty-free access, similar to the US-Bangladesh reciprocal trade pact.
The US-Bangladesh agreement allows tariff-free exports of apparel and textiles to America if manufacturers use US-produced cotton or man-made fibre inputs. Washington also lowered reciprocal tariffs on Bangladesh to 19% from 20%, narrowing the tariff gap between India and Bangladesh.
Bangladesh, the world’s second-largest garment exporter, is one of India’s key competitors in the US textile and apparel market, alongside China and Vietnam.
‘No impact on Indian farmers’
Goyal emphasised that the proposed provisions would not adversely affect Indian cotton farmers. He noted that the US has limited cotton production and exports about $5 billion worth annually, while India’s cotton export target stands at $50 billion.
“Only those items that India already imports and which will not hurt farmers in any way have been opened in a calibrated manner,” the minister said. He added that 90–95% of agricultural produce remains outside the scope of the US trade deal.
Products such as dairy, poultry, rice, wheat, soybean, maize, fruits, vegetables, ethanol, tobacco, meat, pulses and millets are not part of the agreement, he said.
According to Goyal, the trade pact will help expand India’s exports not just to the US but also to other developed markets including the EU, UK, Switzerland, Norway and Australia. “The ₹5 lakh crore we export today can grow to ₹10 lakh crore,” he said.
Broader trade push
Goyal also said India’s trade agreements now cover nearly 70% of global GDP and that recently signed free trade agreements are opening developed markets to Indian industries, including medical devices, at concessional duties.
He urged industry stakeholders to provide suggestions on enabling startup founders to retain greater equity ownership and called for expanded infrastructure for sectors such as medical technology and data centres.
On clean energy and digital infrastructure, the minister said India is positioning itself as a competitive destination with round-the-clock renewable power availability, aiming to strengthen its standing in global supply chains.
The interim trade agreement with the US is expected to provide further clarity once finalised, with detailed provisions to be reflected in the fine print.
