13 Feb 2026·Source: The Hindu

4 min

EconomyInternational RelationsNEWS

India eyes zero-tariff textile exports to U.S. under interim deal

Commerce Minister Goyal says India can match Bangladesh's U.S. textile deal.

Photo by Héctor J. Rivas

Commerce Minister Piyush Goyal stated that India could receive the same benefits on textile exports to the U.S. under its interim trade agreement, similar to Bangladesh's deal. He clarified that if raw materials are purchased from the U.S., processed, and exported as cloth, zero reciprocal tariffs would apply.

The agreement is still being finalized and will have details in the fine print. The Bangladesh-U.S. deal reduces tariffs to 19% overall, with a provision for 0% tariffs if cotton is imported from the U.S.

Mr. Goyal refuted claims that Bangladesh has more benefits than India from the trade deal.

Key Facts

Commerce Minister Piyush Goyal stated India could receive similar textile export benefits to the U.S. as Bangladesh under an interim trade agreement.

The benefit hinges on purchasing raw materials from the U.S., processing them into cloth, and then exporting.

Zero reciprocal tariffs would apply under this arrangement.

The India-U.S. agreement is still being finalized, with details to be specified in the fine print.

The Bangladesh-U.S. deal reduces tariffs to 19% overall, with a provision for 0% tariffs if cotton is imported from the U.S.

UPSC Exam Angles

GS Paper 3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Connects to the syllabus through international trade, trade agreements, and their impact on the Indian economy.

Potential question types include statement-based questions on trade agreements, their evolution, and their impact on specific sectors.

Visual Insights

Key Textile Export Partners: India and the U.S.

This map highlights India and the U.S., the two countries involved in the potential zero-tariff textile export agreement. It also shows Bangladesh as a point of comparison.

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📍India📍United States📍Bangladesh

More Information

Background

The concept of trade agreements has been central to international relations for centuries. Early examples include treaties between ancient civilizations to facilitate the exchange of goods and services. These agreements often aimed to reduce barriers to trade, such as tariffs and quotas, to promote economic growth and cooperation. Over time, trade agreements have evolved in complexity and scope. The General Agreement on Tariffs and Trade (GATT), established in 1948, played a crucial role in reducing tariffs and promoting multilateral trade. GATT was later replaced by the World Trade Organization (WTO) in 1995, which expanded the scope of trade negotiations to include services, intellectual property, and other areas. Bilateral and regional trade agreements have also become increasingly common. These agreements, such as the North American Free Trade Agreement (NAFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), involve preferential trade arrangements between specific countries or regions. These agreements often include provisions on investment, labor standards, and environmental protection, in addition to tariff reductions. The use of tariffs has varied throughout history. While tariffs can protect domestic industries, they can also lead to higher prices for consumers and retaliatory measures from other countries. The ongoing debate over tariffs reflects the complex interplay between protectionism and free trade.

Latest Developments

Recently, there has been a growing trend towards negotiating interim trade agreements. These agreements, often referred to as "mini-deals," are designed to address specific trade issues and provide immediate benefits while broader negotiations continue. The focus on specific sectors, like textiles, allows for quicker implementation and targeted impact. The rise of protectionist measures in some countries has led to increased trade tensions and a renewed emphasis on bilateral trade deals. Countries are seeking to diversify their trade relationships and reduce their reliance on any single market. This has resulted in a flurry of negotiations and agreements aimed at securing preferential access to key markets. Looking ahead, the future of trade agreements will likely be shaped by technological advancements, changing geopolitical dynamics, and evolving consumer preferences. The growth of e-commerce and digital trade will require new rules and regulations to address issues such as data flows, cybersecurity, and consumer protection. The WTO's role in facilitating global trade will also be crucial in navigating these challenges. India's pursuit of zero-tariff textile exports to the U.S. reflects a broader strategy to enhance its competitiveness in global markets. By leveraging its strengths in textile manufacturing and seeking preferential trade arrangements, India aims to boost its exports and create new opportunities for its domestic industries. The success of this strategy will depend on effective negotiations, policy reforms, and investments in infrastructure and technology.

Frequently Asked Questions

1. What are the key facts about the potential India-U.S. textile agreement that are important for the UPSC Prelims exam?

For the UPSC Prelims, remember these points: India is aiming for zero-tariff textile exports to the U.S. under an interim trade agreement. This is similar to the Bangladesh-U.S. deal. A key condition is that raw materials must be sourced from the U.S. to qualify for zero tariffs.

Exam Tip

Focus on the reciprocal nature of the deal and the condition of sourcing raw materials from the U.S.

2. Why is the potential India-U.S. textile agreement in the news recently?

The potential agreement is in the news because Commerce Minister Piyush Goyal announced that India could receive similar benefits to Bangladesh on textile exports to the U.S. under an interim trade agreement. Negotiations are ongoing, and the details are being finalized, with the deal expected to be signed around mid-March.

Exam Tip

Stay updated on the progress of the negotiations and the specific terms of the agreement as they are announced.

3. What are the potential pros and cons of India entering into an interim trade agreement with the U.S. specifically for the textile sector?

Potential pros include increased textile exports to the U.S., boosting the Indian textile industry, and attracting investment. A potential con is the dependency on U.S. raw materials, which could make the Indian textile industry vulnerable to price fluctuations and supply chain disruptions in the U.S.

Exam Tip

Consider the long-term implications for the Indian textile industry and its competitiveness in the global market.

4. How does the potential India-U.S. textile agreement differ from the existing Bangladesh-U.S. trade deal?

The Bangladesh-U.S. deal reduces tariffs to 19% overall, with a provision for 0% tariffs if cotton is imported from the U.S. The potential India-U.S. agreement aims for a similar zero-tariff arrangement, contingent on sourcing raw materials from the U.S. The exact details and scope of the India-U.S. agreement are still being finalized.

Exam Tip

Pay close attention to the specific tariff rates and conditions outlined in each agreement.

5. What is the concept of 'reciprocal tariffs' and how does it apply to the India-U.S. textile agreement?

Reciprocal tariffs involve two countries reducing tariffs on each other's goods. In the context of the India-U.S. textile agreement, the idea is that if India purchases raw materials from the U.S., processes them into cloth, and exports the finished product back to the U.S., zero reciprocal tariffs would apply, meaning neither country would impose tariffs on these specific textile goods.

Exam Tip

Understand that reciprocal tariffs are designed to promote balanced trade between countries.

6. What are the important dates to remember regarding the India-U.S. textile agreement for the UPSC exam?

The key dates to remember are: February 13, 2026, which is the date of the news report, and mid-March, which is the expected signing of the interim deal. These dates provide a timeline for the recent developments.

Exam Tip

While specific dates might not be directly asked, knowing the timeline helps in understanding the sequence of events.

Practice Questions (MCQs)

1. Consider the following statements regarding India's potential interim trade agreement with the U.S. concerning textile exports: 1. The agreement aims for zero reciprocal tariffs on textile exports from India to the U.S. 2. The zero-tariff benefit is conditional on India purchasing raw materials from the U.S. 3. The agreement guarantees that India will receive more benefits than Bangladesh. 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: A

Statement 1 is CORRECT: The agreement aims for zero reciprocal tariffs on textile exports from India to the U.S. if certain conditions are met. Statement 2 is CORRECT: The zero-tariff benefit is conditional on India purchasing raw materials from the U.S., processing them, and then exporting them as cloth. Statement 3 is INCORRECT: The Commerce Minister refuted claims that Bangladesh has more benefits than India from the trade deal; it does not guarantee that India will receive more benefits.

2. In the context of international trade, what does 'reciprocal tariff' generally imply?

A.A tariff imposed by a country on all imports regardless of origin.
B.A tariff that is reduced or eliminated by two or more countries on goods traded between them.
C.A tariff that is imposed only on goods originating from developing countries.
D.A tariff that is increased annually based on inflation rates.

Show Answer

Answer: B

A reciprocal tariff implies that two or more countries agree to reduce or eliminate tariffs on goods traded between them. This is done to promote trade and economic cooperation. Option A is incorrect because it describes a general tariff. Options C and D are incorrect as they describe specific types of tariffs not related to reciprocity.

3. Which of the following organizations primarily facilitates multilateral trade negotiations and dispute resolution among member countries?

A.International Monetary Fund (IMF)
B.World Bank
C.World Trade Organization (WTO)
D.United Nations Conference on Trade and Development (UNCTAD)

Show Answer

Answer: C

The World Trade Organization (WTO) is the primary international organization that facilitates multilateral trade negotiations and dispute resolution among member countries. The IMF focuses on global monetary cooperation, the World Bank on providing loans for development, and UNCTAD on promoting trade and development in developing countries.