India to get Bangladesh-like garment benefits

India will receive concessional duty access for garments made using American yarn and cotton under its proposed trade agreement with the United States, Commerce and Industry Minister Piyush Goyal said on Thursday, indicating that the benefits will mirror those currently extended to Bangladesh.

Under the existing US-Bangladesh arrangement, reciprocal tariffs on Bangladeshi goods have been reduced to 19 per cent. However, garments attract zero duty only if they are manufactured using US cotton and man-made fibres. At present, Bangladeshi garments face a 31 per cent levy — comprising 12 per cent most favoured nation (MFN) duty and 19 per cent reciprocal tariff. If US fibres are used, the duty drops to 12 per cent.

Goyal said India will secure similar terms in the final agreement. He explained that if an Indian company procures yarn and cotton from the US, manufactures garments and re-exports them to America, those products would also enjoy duty-free access.

The minister clarified that the provision, already part of the US-Bangladesh agreement, would be included in India’s pact as well and would not adversely affect Indian cotton farmers. He noted that US cotton exports are limited to around USD 5 million, while India is targeting USD 50 billion in trade.

India and the US have finalised the framework for the first phase of the bilateral trade agreement, which is expected to be implemented in March.

The remarks come amid criticism from the opposition, which has termed the interim trade deal a “wholesale surrender” affecting energy security and farmers’ interests.

Separately, Goyal said India’s free trade agreements covering 38 countries would open developed markets to domestic medical device manufacturers at concessional duties, boosting the sector’s growth prospects.