13 Feb 2026·Source: The Indian Express

4 min

EconomyInternational RelationsNEWS

India to Get Zero-Duty Textile Access in US Trade Deal

India-US trade deal to include zero-duty textile access similar to Bangladesh.

Photo by Suraj Tomer

The India-US trade deal, expected to be signed next month, will include provisions similar to the Bangladesh-US deal, allowing limited textile and clothing exports to the US at zero reciprocal duty, according to Commerce Minister Piyush Goyal. This addresses concerns among Indian garment manufacturers about facing a disadvantage compared to Bangladeshi exports after Dhaka's new US trade deal. The benefit is contingent on purchasing raw materials from the US.

Key Facts

The India-US trade deal is expected to be signed next month.

The deal will include provisions similar to the Bangladesh-US deal.

The deal allows limited textile and clothing exports to the US at zero reciprocal duty.

The zero-duty access is contingent on purchasing raw materials from the US.

Indian garment manufacturers were concerned about facing a disadvantage compared to Bangladeshi exports.

UPSC Exam Angles

GS Paper 3 (Economy): Trade agreements and their impact on the Indian economy

Connects to the syllabus topics of international trade, trade policy, and economic development

Potential question types: Statement-based MCQs, analytical questions on the benefits and challenges of trade agreements

Visual Insights

Key Countries Involved in the India-US Textile Trade Deal

This map highlights India and the US, the two countries involved in the trade deal, and Bangladesh, a key competitor in the textile market.

Loading interactive map...

📍India📍United States📍Bangladesh

More Information

Background

The concept of trade agreements has a long history, evolving from simple barter systems to complex international treaties. Early trade routes like the Silk Road facilitated the exchange of goods and ideas between different civilizations. Over time, nations began to formalize trade relationships through treaties, often focusing on reducing tariffs and other barriers to commerce. These agreements aimed to promote economic growth and foster diplomatic ties. The evolution of trade agreements saw significant changes in the 20th century with the establishment of the General Agreement on Tariffs and Trade (GATT) after World War II. GATT aimed to reduce tariffs and promote free trade among member nations. It was later replaced by the World Trade Organization (WTO) in 1995, which expanded the scope of trade agreements to include services, intellectual property, and other areas. The WTO provides a framework for negotiating and enforcing trade rules among its members. Bilateral trade agreements, like the one discussed in the news, are agreements between two countries to reduce trade barriers and promote economic cooperation. These agreements can cover a wide range of issues, including tariffs, quotas, investment, and intellectual property rights. The legal framework for such agreements in India is guided by the Foreign Trade (Development and Regulation) Act, 1992, which empowers the government to formulate and implement foreign trade policy.

Latest Developments

In recent years, there has been a growing trend towards regional and bilateral trade agreements, driven by a desire to deepen economic integration and address specific trade issues. The Regional Comprehensive Economic Partnership (RCEP), a free trade agreement among 15 Asia-Pacific countries, is a notable example. However, India withdrew from RCEP in 2019 due to concerns about its potential impact on domestic industries. The government is now focusing on negotiating bilateral trade agreements with key partners, including the US, the UK, and the EU.

The India-US trade relationship has seen increased engagement in recent years, with both countries seeking to strengthen economic ties. The US is one of India's largest trading partners, and bilateral trade has been growing steadily. However, there have also been trade disputes between the two countries, particularly over issues such as tariffs on steel and aluminum, and market access for agricultural products. Negotiations are ongoing to resolve these issues and deepen trade cooperation. The proposed trade deal mentioned in the news is part of this effort to strengthen the India-US economic partnership.

Looking ahead, the future of trade agreements will likely be shaped by factors such as the rise of protectionism, the impact of technology on trade, and the need to address environmental and social concerns. The WTO is facing challenges in its role as a multilateral trade forum, and there is a growing debate about the future of global trade governance. India is expected to play an increasingly important role in shaping the global trade landscape, given its growing economic influence and its strategic location in the Indo-Pacific region. The government's focus on promoting exports and attracting foreign investment will be key to its trade strategy.

Frequently Asked Questions

1. What are the key facts about the India-US trade deal regarding textiles for the UPSC Prelims?

The key facts are: the deal is expected to be signed next month, it includes zero-duty textile access to the US (similar to Bangladesh), but this is contingent on purchasing raw materials from the US. This aims to address the disadvantage faced by Indian garment manufacturers.

2. Why is the India-US trade deal including zero-duty textile access in the news recently?

The deal is in the news because it addresses concerns among Indian garment manufacturers who were at a disadvantage compared to Bangladeshi exports after Dhaka's new US trade deal. The zero-duty access aims to level the playing field, albeit with the condition of sourcing raw materials from the US.

3. What is zero-duty access and why is it important in trade agreements like the India-US deal?

Zero-duty access means that goods can be exported to a country without any tariffs or taxes being imposed. This is important because it can make a country's exports more competitive, increasing trade and boosting economic growth. In the India-US deal, it aims to help Indian textile manufacturers compete with Bangladesh.

4. What are the potential pros and cons of the India-US zero-duty textile agreement?

Pros include increased competitiveness for Indian textiles, boosting exports and potentially creating jobs. Cons include the condition of sourcing raw materials from the US, which might increase costs for Indian manufacturers. There might also be concerns about the 'limited' quantity of textiles allowed under zero duty.

5. How does the India-US textile deal differ from a standard reciprocal trade agreement?

This deal is not a standard reciprocal agreement because the zero-duty access for India is contingent on purchasing raw materials from the US. A typical reciprocal agreement would involve both countries reducing tariffs on each other's goods without such conditions. This deal is more targeted, addressing a specific competitive disadvantage.

6. Who is Piyush Goyal and what is his role related to this India-US trade deal?

Piyush Goyal is the Commerce Minister. As per the topic data, he announced that the India-US trade deal will include provisions similar to the Bangladesh-US deal, allowing limited textile and clothing exports to the US at zero reciprocal duty.

Practice Questions (MCQs)

1. Consider the following statements regarding the proposed India-US trade deal mentioned in the news: 1. It aims to provide zero-duty access for Indian textiles to the US market, similar to the Bangladesh-US trade deal. 2. The deal mandates that Indian garment manufacturers purchase raw materials exclusively from the US to avail the benefits. Which of the statements given above is/are correct?

A.1 only
B.2 only
C.Both 1 and 2
D.Neither 1 nor 2

Show Answer

Answer: C

Statement 1 is CORRECT: The India-US trade deal aims to provide zero-duty access for Indian textiles to the US market, similar to the Bangladesh-US trade deal. Statement 2 is CORRECT: The benefit of zero-duty access is contingent on purchasing raw materials from the US.

2. Which of the following best describes the primary objective of the General Agreement on Tariffs and Trade (GATT)?

A.To establish a common currency among member nations
B.To promote free trade by reducing tariffs and trade barriers
C.To regulate international labor standards
D.To provide financial assistance to developing countries

Show Answer

Answer: B

The primary objective of the General Agreement on Tariffs and Trade (GATT) was to promote free trade by reducing tariffs and other trade barriers among member nations. GATT was established after World War II to foster economic cooperation and prevent trade wars.

3. Consider the following statements regarding the World Trade Organization (WTO): 1. The WTO replaced the General Agreement on Tariffs and Trade (GATT) in 1995. 2. The WTO's dispute settlement mechanism is binding on its member countries. 3. All decisions in the WTO are made by consensus. Which of the statements given above is/are correct?

A.1 and 2 only
B.2 and 3 only
C.1 and 3 only
D.1, 2 and 3

Show Answer

Answer: D

Statement 1 is CORRECT: The WTO replaced GATT in 1995, expanding the scope of trade agreements. Statement 2 is CORRECT: The WTO's dispute settlement mechanism is binding on its member countries. Statement 3 is CORRECT: The WTO strives to make decisions by consensus, although voting is possible in some cases.

4. The Foreign Trade (Development and Regulation) Act, 1992 empowers the Indian government to:

A.Regulate domestic trade within states
B.Formulate and implement foreign trade policy
C.Impose taxes on agricultural income
D.Control the stock market

Show Answer

Answer: B

The Foreign Trade (Development and Regulation) Act, 1992 empowers the Indian government to formulate and implement foreign trade policy. This act provides the legal framework for regulating India's international trade.