Talks possible on duty-free access to American cotton and agricultural quota
While some sectors have proposed incentives to accommodate US products, industry sources said the recent escalation in tension between New Delhi and Washington — due to additional tariffs over the Russian oil trade — is turning popular sentiment against a trade deal.
Duty-free market access to US cotton, accepting agricultural items under limited quotas — these are among the possible concessions that the industry has suggested ahead of the crucial round of negotiations later this month when the US team is expected to arrive in India, The has learnt.
Earlier this month, Commerce Minister Piyush Goyal had sought suggestions from industry executives on ways to sweeten the trade deal with the US.
While some sectors have proposed incentives to accommodate US products, industry sources said the recent escalation in tension between New Delhi and Washington — due to additional tariffs over the Russian oil trade — is turning popular sentiment against a trade deal.
Importing duty-free US cotton is one of the areas being suggested to the government, which would also benefit domestic manufacturing amid declining cotton production in the country. Notably, Bangladesh, which has signed a deal with the US, had also offered a similar concession. The US market accounts for nearly 30 per cent of India’s total apparel exports.
A government official said that quotas for American agricultural items have also been considered, but these do not include genetically modified (GM) products. There is significant resistance to GM crops in India, and only one GM crop — Bt cotton — is approved for cultivation. However, no GM food crop is commercially grown in India.
Meanwhile, following the steep tariff announced by the US, the industry has sought immediate relief — like expansion of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme to more sectors, and the Interest Subvention Scheme (ISS) for Micro, Small and Medium Enterprises (MSMEs).
An exporter who did not want to be named said that established brands are not cancelling orders, but have begun putting them on hold, pending the outcome of negotiations slated for later this month.
“Everybody [US importers] is saying, give us at least three weeks to revert — so, till the US negotiators reach India by August 25, and then maybe some relief could come. Indian exporters can absorb five to seven per cent tariff. Pharma has margins, so the challenge is less there. But in most other areas, margins are low. Other items — say proprietary items like what Apple produces — can withstand the pressure, but footwear and textiles have little margin and the competition is intense,” the exporter said.
Another exporter said that higher tariffs could increase exports during the 21-day window. However, if the 50 per cent duty comes into effect, Indian goods will be worse off as compared to China, Bangladesh, Vietnam and most of the other competitors.
An executive operating in the gems and jewellery sector said the industry has sought support from the government on the lines of the intervention during Covid, as concerns over imports of rough diamonds still remain and Indian goods may not remain competitive in the US market after 25 per cent tariffs.
Meanwhile, India has already stepped up its oil imports from the US, with imports jumping over 270 per cent year-on-year in the first four months of 2025. According to data released by the Directorate General of Commercial Intelligence and Statistics (DGCIS), India imported 6.31 million tonnes of US crude in January–April, a sharp increase from 1.69 million tonnes in the same period last year.
read more:- Textile industry worried about US tariffs
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