A key issue for India’s textile industry is access to the proposed US textile mechanism based on tariff-rate quotas (TRQs), which could provide zero-duty access for specified quantities of eligible textile and apparel products. Bangladesh, Cambodia, Indonesia and Malaysia have been included in the proposed mechanism, while India has been left out.
India is seeking US textile market-access benefits comparable to Bangladesh and Cambodia under a proposed TRQ mechanism.
Inclusion could offer zero-duty access within specified quotas, helping Indian exporters offset the additional 10 per cent tariff.
The issue is part of ongoing India-US BTA talks, while the US quota mechanism is yet to be operationalised.
India is now engaging with the US on its textile exports as part of the ongoing BTA negotiations, with the industry looking for benefits comparable to those available to competing Asian suppliers under the quota mechanism.
Recently, the Ministry of Commerce and Industry said the government would remain engaged with the US to secure an early conclusion of the India-US BTA while continuing discussions on sector-specific issues, including textiles.
Washington has imposed an additional 10 per cent tariff on Indian imports covered by its Section 301 investigation into forced labour-related trade practices. The final rate is lower than the 12.5 per cent initially proposed by the Office of the United States Trade Representative (USTR) in June, following consultations and submissions by India.
India was placed in the lower tariff tier under the final Section 301 measures announced by the USTR on July 23. The government said the outcome provides Indian exporters with a relative advantage over several other economies covered by the investigation.
However, India’s exclusion from the textile-specific mechanism has emerged as a concern for the domestic textile and apparel industry. Under the final measures, the USTR provided for establishing a textile mechanism through TRQs for Bangladesh, Cambodia, Indonesia and Malaysia. The arrangement is intended to encourage these countries to import US cotton and textile goods and reduce their reliance on inputs from sources considered more likely to contain forced-labour inputs.
The quota mechanism could become particularly important for sourcing competitiveness if eligible textile and apparel shipments within prescribed quotas receive zero-duty access to the US market. Indian exporters are therefore looking for comparable treatment to prevent a tariff disadvantage against competing suppliers such as Bangladesh and Cambodia.
The Confederation of Indian Textile Industry (CITI) has also raised concerns that Indian exporters could lose competitiveness against regional rivals because India has not been included in the proposed textile quota mechanism.
The Ministry, however, highlighted that the textile-specific mechanism referred to in the final US measures is yet to be established and operationalised. “India continues to engage with the US on this matter as part of the ongoing negotiations for the India-US Bilateral Trade Agreement (BTA),” the Ministry said.
The government also reiterated that it “remains committed” to working with the US towards an early conclusion of the BTA.
Securing access comparable to Bangladesh, Cambodia and other countries covered by the textile mechanism could become an important negotiating priority for India’s textile and garment sector. Zero-duty access within an agreed quota could help offset the impact of the additional 10 per cent tariff and preserve India’s competitiveness in the US market.
The final benefit, however, will depend on the structure and eligibility conditions of the US textile mechanism and the outcome of India-US BTA negotiations, as the quota system is yet to become operational.
Fibre2Fashion News Desk (KUL)
