New Delhi: India’s exports from labour-intensive sectors such as apparel, footwear, plastics, rubber, organic chemicals and home decor will get a major fillip in the US market following a reduction in tariffs by the US under the interim trade pact.
India and the US on Saturday announced that they have reached a framework for the first phase of the bilateral trade agreement under which both sides will reduce import duties on a number of goods to boost two-way trade.
According to a joint statement, the US will reduce tariffs on Indian goods to 18 per cent. The US has removed the punitive 25 per cent additional duty on Indian goods, and the 25 per cent reciprocal tariffs are expected to be reduced to 18 per cent soon.
The duties will be cut down on Indian goods including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home decor, artisanal products, and certain machinery.
Duties will also be reduced on gems and diamonds and aircraft parts.
Similarly, India will receive a preferential tariff rate quota for automotive parts, it said.
India’s exports from the labour-intensive sectors were impacted due to the steep 50 per cent tariffs imposed by the US from August 27. Though they have diversified to other countries, including Europe and Africa, the US was a major destination for them.
Commenting on the development, Apparel Export Promotion Council (AEPC) chairman A Sakthivel said the tariff eliminations will greatly strengthen the global competitiveness of the Indian textiles and apparel sector.
Ready-made garment exports rose by a meagre 2.36 per cent to USD 11.6 billion during April-December 2025-26. The US is the top market for the sector.
Ramesh Kumar Juneja, chairman of the Council for Leather Exports (CLE) said the deal will help increase exports to about 30 per cent in the first year after the implementation of the pact.
“At present, our exports to the US stood at about Rs 15,000 crore and about 42 lakh people are employed. The deal will give a major boost,” he said.
Leather and footwear exports dipped 0.23 per cent to USD 3.3 billion during April-December 2025-26.
The Gems and Jewellery Export Promotion Council (GJEPC) said the diamond sector had taken a severe hit over the past year, with India’s cut and polished diamond exports to the US – largest market – declining by over 60 per cent, from USD 3.64 billion in April-December 2024 to USD 1.45 billion in April-December 2025, as tariffs eroded competitiveness.
“We are confident that, upon conclusion of the Interim Agreement, diamonds and coloured gemstones will receive full zero-duty treatment as envisaged, restoring competitiveness in our most critical market,” it said.
Further exports from India like machinery parts, aircraft parts, elementary auto parts, coins, platinum, essential oils, home decor items, inorganic compounds, paper, plastic, natural rubber will benefit from zero reciprocal tariff, Commerce and Industry Minister Piyush Goyal said.
