India will get similar garment duty privileges as Bangladesh in US trade deal: Piyush Goyal
Commerce and Industry Minister Piyush Goyal has said that India will receive preferential duty access for garments made using American yarn and cotton under its trade agreement with the US, much like the benefits currently granted to Bangladesh. The US will lower reciprocal tariffs on Bangladeshi goods to 19 per cent, with garments qualifying for zero duty only if they are made using US cotton and man-made fibers.
A Bangladeshi garment now faces a 31 per cent levy (12 per cent for most-favoured nation plus 19 per cent reciprocal), and if it uses US fibres, then duty falls to 12 per cent. He mentioned if an Indian company procures yarn forward and cotton forward from the US, manufactures garments, and re-exports to the US, those garments will also receive duty-free access in America, just like Bangladeshi firms. He said that is there in that US-Bangladesh agreement, and it will be in India-US agreement also. He added that it will not have any impact on Indian cotton farmers.
Further, he said that cotton production in the US is constrained, with exports amounting to only $5 million, while India's target stands at $50 billion. In trade agreements, ‘yarn forward’ and ‘cotton forward’ are rules of origin (RoO) requiring specific production steps within the free trade area (FTA) to qualify for duty-free benefits, ensuring the final apparel uses materials sourced from FTA partners, boosting regional manufacturing. The benefit for the apparel sector will flow after India and the US sign the legal agreement for an interim trade deal by mid-March.
