The incoming US administration’s focus on “reciprocity” in trade relations has raised concerns within the Indian textile industry. While the US might argue for parity in tariffs, the nature of trade between the two nations makes a direct product-to-product comparison impractical. India primarily exports textiles and apparel to the US, while its imports from the US are largely in areas like crude oil, coal, and agricultural goods.
The US may seek to leverage its agricultural strength, particularly in areas like wheat, maize, and poultry, where it enjoys significant subsidies and a competitive advantage. This poses a potential threat to India’s agricultural self-sufficiency.
While the US has signalled an intent to revitalize domestic manufacturing, particularly in sectors like electric vehicles and semiconductors, the Indian textile industry is less likely to be a primary target for immediate tariff increases. However, the potential for retaliatory measures across various sectors, including manufacturing, cannot be ruled out.
This situation underscores the need for India to strategically review its own tariff structure. A targeted reduction in tariffs on select items could boost low-cost, value-added manufacturing and enhance trade competitiveness while minimizing revenue losses.
Furthermore, India must be prepared to counter potential US aggression on trade issues, as it did in 2018 with its calibrated response to steel and aluminium tariffs.
