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COVER STORY FEBRUARY 20, 2026 | The Indian Eye 4

INDIA–US TRADE

MODI GOVT

DEFENDS DEAL

As the interim India–US trade agreement moves towards fine print, a fierce political battle
has erupted over tariffs, cotton imports and the future of India’s textile backbone

OUR BUREAU diamonds, and aircraft parts will be
removed.
New Delhi/Washington
Goyal has described this as his-
he India–US interim trade toric. “India has received the lowest
agreement, unveiled after a tariff rates from the US compared to
TFebruary 2 phone call between other developing economy competi-
Prime Minister Narendra Modi and tors. I believe this is a game changer
US President Donald Trump, was for India’s future progress and devel-
meant to signal momentum towards opment,” he said.
a broader Bilateral Trade Agreement
(BTA). Instead, it has triggered an in- The textile sector is central to
tense political confrontation, with the
government projecting it as a “game the government’s optimism.
changer” and the Opposition brand- Through the 9 FTAs, markets
ing it a “trap deal” that could hurt
cotton farmers and textile exporters. worth nearly Rs 45 lakh crore
At the heart of the clash lies a are opening up for Indian
deceptively simple question: does
the new tariff regime open unprece- goods. The US alone buys Rs
dented opportunity for India, or does 9 lakh crore worth of textiles,
it corner the country into difficult
trade-offs? while the European Union buys
A Calibrated Opening over Rs 22 lakh crore. Accord-

nion Commerce Minister Pi- ing to SBI Research, the US
yush Goyal has framed the currently imports around USD
Udeal as part of a larger strat-
egy. Speaking at a press conference 7.5 billion of textiles from In-
on the #ViksitBharatBudget, he dia and a similar amount from
underlined that “nearly 70 per cent
of global trade markets are open to Bangladesh.
India, where preferential access has
been ensured through Free Trade “There are tremendous oppor-
Agreements (FTAs).” India, he said, tunities opening up for India’s textile
has concluded “9 FTAs with 38 devel- sector. I am confident that Indian en-
oped countries,” providing “special trepreneurs will take full advantage
advantages compared to other coun- of this opportunity, capture large
tries.” Union Minister of Commerce & Industry Piyush Goyal, with US Ambassador to India Sergio Gor at markets, increase exports, and gen-
“These 9 FTAs protect all sensi- erate employment,” Goyal said.
tive sectors while allowing calibrated the reception hosted at US Ambassador Sergio Gor’s residence, in New Delhi (ANI Video Grab) A key provision has drawn par-
openings in areas where imports are ticular attention: the “yarn forward”
needed. They create policy stability, line number is significant. Since Au- cent on selected Indian goods includ- principle. As Goyal explained to ET
clarity, and predictability, which at- gust 2025, Indian goods entering the ing textiles, apparel, leather, foot- NOW, “It’s called a yarn forward —
tract large-scale investments,” Goyal US had faced a 50 per cent tariff. wear and certain machinery. Upon if you buy cotton or yarn from the US
asserted. Following the leaders’ phone call, full implementation, US tariffs on and process it and produce garment,
On the US specifically, the head- that tariff has been reduced to 18 per generic pharmaceuticals, gems and Continued on next page... >>

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