News & Insights | Textile Industry

Ramkumar: As G20 leaders meet, strengthening Indo-U.S. ties is vital

Published: September 9, 2023
Author: TEXTILE VALUE CHAIN

G20 leaders are meeting this weekend in New Delhi, India to strengthen global ties for economic vitality and growth. It is encouraging that President Biden is visiting India for this important conclave of leading nations, considering the news that First Lady Jill Biden has been diagnosed as COVID-19 positive. Such a high-profile trip symbolizes the need to revitalize the diplomatic relationship between the two major democracies. Actively engaging with a fast growing economy and the most populous nation is in the best political, economic and defense interests of the United States. As projected by IMF, the Indian economy is expected to grow between 6.1 and 6.3% in 2023 and 2024, while the Chinese economy is expected to slow down to 4.5% in 2024. Chinese President Xi Jinping is not planning his trip to New Delhi, leading to speculations about the reasons for such a high-profile absence—one being tensions between India on the border issue and with Western developed economies on many simmering sensitive issues.

India’s Prime Minister Narendra Modi has prioritized positioning India positively in the global platform to attract investments and engaging with many foreign leaders by navigating the globe tirelessly with the recent visit to the United States in June, to this week’s trip to Indonesia for the ASEAN summit. Given the ongoing tensions between China with United States and India, renewed, and strengthened relationship between India and United States is a matter of national security and economic vitality.

United States rightly sees China as a high-level competitor on a unlevel playing field in different sectors such as high tech. The participation of President Biden by traveling to New Delhi is a clear strategic move to associate closer with India as a way of countering China technologically and economically. One of the important agenda items at the G20 summit pushed by the United States is to revamp the World Bank by pumping additional dollars to lend to infrastructure and climate support initiatives, and to boost loans to low- and middle-income countries. Such a move will bring low income and developing economies in Africa and Asia closer to freedom-loving nations.

West Texas and India Ties

United States and India are two leading cotton producing countries. While the United States is the leading exporter of cotton, powered by production from the High Plain of Texas, India is a leading producer of cotton textiles. India has excess capacity of spinning and hence needs quality cotton at a competitive price. The recent crisis in the textile sector in India fueled by high volatility in cotton prices, lack of reliable production data, growing appetite for raw materials, and lack of global demand, all provide opportunities for the United States to initiate trade discussions on duty free export and import trade regimes in cotton textiles.

India imposes an 11% import duty on cotton, which is not favored by the textile manufacturing sector in India. “Organized spinning sector has been demanding duty free import of cotton,” said Velmurugan Shanmugam, general manager of Jayalakshmi Textiles in South India.

Last year, Jayalakshmi Textiles, a fine count yarn spinning mill imported cotton from West Texas. “Quality consistency, contamination free, traceability, better performance and yarn realization, attract us to import U.S. cotton. However, the duty on cotton makes it uncompetitive against major exporting nations such as Vietnam and Bangladesh,” said Shanmugam.

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