India–US Trade Deal: Major Win For Indian Textiles
India and the United States have finalised a revolutionary US$ 500 billion trade agreement, ending nearly a year of tense negotiations and marking a significant reset in bilateral economic ties. Announced by US President Donald Trump and acknowledged by Prime Minister Narendra Modi, the deal reduces US tariffs on Indian goods to 18 percent from a punitive 50 percent, offering major relief to Indian exporters and reinforcing India’s patient and resilient negotiating stance.
The agreement comes after a prolonged phase in which India faced some of the highest US tariffs globally, testing bilateral relations but also underlining New Delhi’s refusal to compromise on core national interests.
For the Indian textile and apparel industry, the deal is a major turning point. The United States is India’s largest export destination for textiles and apparel, accounting for nearly US$ 10 billion in exports and around 28 percent of the country’s total shipments. The sharp escalation of tariffs to 50 percent in mid-2025 had severely disrupted exports, putting immense pressure on small and medium enterprises and several export-oriented clusters.
With tariffs now cut to 18 percent, India gains a clear competitive advantage over key textile-producing rivals, facing lower duties than China at 34 percent, Bangladesh and Vietnam at 20 percent, and Indonesia and Pakistan at 19 percent, potentially triggering a renewed shift in US sourcing towards Indian manufacturers.
The agreement follows an extended negotiating process that began with Prime Minister Modi’s visit to Washington in February 2025, when both sides agreed to work towards a trade framework and set a target of growing bilateral trade to US$ 500 billion by 2030. Subsequent negotiations saw multiple ministerial-level engagements but remained difficult as the US raised concerns over tariffs, non-tariff barriers, data rules and intellectual property issues. Tensions peaked in July and August 2025 when Washington imposed successive tariff hikes, ultimately taking duties on Indian exports to 50 percent, while linking the penalties to India’s continued purchases of Russian oil.
Diplomatic engagement continued despite the tariff standoff, with high-level political communication resuming towards the end of 2025. The breakthrough came in early February 2026, with President Trump stating that Prime Minister Modi had agreed to stop buying Russian oil and instead increase purchases of US energy and other goods, an assertion that formed a key part of the US narrative around the deal.
Indian official statements, however, have focused on the tariff reduction and expanded market access, without publicly detailing any commitments related to Russian oil purchases. Under the agreement, the US will reduce tariffs on Indian goods to 18 percent, while India will cut tariffs and non-tariff barriers on US products and significantly expand imports of American energy, technology, agricultural and industrial goods.
Beyond tariff relief, the deal carries broader strategic and economic significance, signalling deeper India–US engagement at a time of global supply-chain realignment. For Indian industry, particularly textiles and apparel, it restores competitiveness and predictability in the US market, opening the door for renewed investment, capacity expansion and employment growth, while underlining India’s ability to secure outcomes through sustained diplomacy and strategic restraint.
