Lower US tariffs on textile goods could make India competitive: Crisil
2025-06-26 13:08:06
US Tariff Cut May Boost Indian Textiles
According to Crisil, the US-India bilateral trade agreement (BTA) under negotiation is likely to reduce India's goods trade surplus with the United States, and India will be able to import more energy products, certain agricultural products and defence equipment, among others, from the US.
Although the United States is India's largest export partner, there is scope to further increase exports in sectors such as smartphones, certain pharma products and labour-intensive exports such as textiles and gems and jewellery, S&P Global said in a note.
As the first tranche of the proposed BTA is targeted to be completed by autumn 2025, India should be prepared to see more imports from the United States as India's tariffs are much higher than those of the United States and reducing them would be beneficial for US exporters.
Crisil feels there is some scope for India to increase its exports to the United States.
Textile products are among the major products exported to the US that attract duty. Lower duty under the BTA could help India compete with other major textile exporters such as Bangladesh, China and Vietnam.
While some textile products such as toilet linen, kitchen linen and bed linen already have significant market share (which should get a boost from the duty reduction), Crisil said the market penetration for products in the readymade garment (RMG) sector is low and would benefit from the duty reduction.
"India's imposition of zero or lower duty on cotton imports from the US could enhance synergies in textile trade, especially when India's cotton production is declining. This could help meet the growing demand for RMG from the US, provided duty on such imports is reduced," it said.
