India’s textile and clothing exports may increase by US $ 6 billion in three years under a planned zero-for-zero trade agreement with the US, levelling the playing field.
After China and Vietnam, India is the US’s third-largest supplier of clothing and textiles. Between January and November 2024, the United States accounted for 28.5 per cent of India’s total exports of textiles and clothing. India imported just US $ 0.41 billion worth of goods from the US in FY24, compared to US $ 10.8 billion in exports.
Over the past five years, US imports from China have decreased at a compound annual growth rate (CAGR) of 9.4 per cent, whilst imports from India have increased at a CAGR of 9.1 per cent, indicating a window of opportunity for India to improve its standing in the US market.
While US companies have partially shifted away from China, Vietnam and Bangladesh have profited the most from the recent trade tensions, as their share has climbed by 7.8 per cent and 3 per cent, respectively. Bangladesh and Vietnam both benefit from tariff exemptions and favourable trade agreements with the United States for textiles.
According to the Confederation of Indian Textile Industries (CITI), by generating an additional US $ 6 billion in revenue over the next three years, India’s textile and apparel exports to the US may reach US $ 16 billion.
It stated that in order to achieve this, India should look into a zero-for-zero trade agreement with the US for textile and clothing goods, with the required protections for delicate goods. Indian exporters would have an even playing field against Bangladesh and Vietnam under a zero-duty regime. It stated that a duty-free access mechanism with quota controls could guarantee a balanced trade strategy because India is still reliant on US cotton imports.
