Several recommendations are being put out by Indian industry participants to improve the deal as the United States and India prepare for a pivotal round of trade negotiations later this month. Duty-free market access to US cotton and allowing specific American agricultural products to be imported under restricted quotas are two noteworthy recommendations. A larger plan to stabilise and enhance bilateral trade relations, particularly in the face of escalating geopolitical concerns, is being investigated in light of these agreements.
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Context: Rising Trade Tensions
The trading situation between the United States and India has grown more complicated in the last several months. The US levying higher tariffs on Indian commodities, primarily in reaction to India’s ongoing purchases of Russian oil in violation of Western sanctions, has been a major contributing factor. As a result, there is now more anxiety in Indian business circles, and hopes of negotiating a positive trade agreement have been tempered.
Several industry players were recently consulted by Commerce Minister Piyush Goyal to get their opinions on possible measures India could take to maintain trade negotiations with the US. Proposals to reduce tensions and provide modest trade concessions while preserving India’s fundamental interests have emerged from these talks.
Duty-Free US Cotton: A Practical Concession
Importing US cotton duty-free is one of the main ideas that is gaining popularity. Industry participants in India contend that this would lessen the burden on domestic textile producers who are having difficulty keeping up with the decline in domestic cotton production. These producers may remain competitive in the global market, particularly in the US market, which purchases approximately 30% of India’s clothing exports, by gaining access to premium US cotton at lower prices.
This kind of action would not be unusual. In previous trade talks, the US received a similar concession from Bangladesh, another significant supplier of clothing. To maintain the viability and worldwide competitiveness of its textile and garment industry, India might do the same.
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Limited Quotas on Agricultural Imports
Allowing American agricultural products to enter India under stringent limitations is another possible concession under consideration. But there are probably going to be some serious restrictions attached to this offer. For example, because to the high level of GM food resistance in India, genetically modified (GM) agricultural items would not be included.
The only genetically modified crop currently authorised for production in India is Bt cotton. There is still substantial public hostility to GM food crops, and none are commercially farmed. In order to prevent public outrage or policy inconsistencies, any concessions on US agricultural imports will need to be carefully managed.
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Concerns Across Sectors
In addition to US cotton and agriculture, a number of other industries are voicing worries about the possible consequences of the US tariffs and the protracted process of negotiating a new trade deal.
Exporters Feeling the Heat
Exporters in industries including leather, footwear, and textiles have expressed concerns that they won’t be able to continue operating in the face of high tariffs. Certain high-profit industries, such as pharmaceuticals, might be able to withstand tariffs of between 5% and 7%, but low-profit industries are already feeling the strain.
Speaking under anonymity, an exporter stated, “Pharma can manage, but most other sectors are struggling.” Indian products can become uncompetitive even with a 5% tax. US consumers are already delaying decisions. They want to hold off on making any additional orders until after the talks are over on August 25.
The exporter went on to say that while high-end, proprietary goods like Apple devices can resist price pressure, labour-intensive industries and commodities goods are fiercely competitive against nations like China, Bangladesh, and Vietnam.
Gems and Jewellery Industry Seeks Support
The diamond and jewellery sector is another significant source of worry, as it is calling for government assistance akin to that provided during the COVID-19 pandemic. Industry participants worry about falling behind in the US market as a result of import limitations on rough diamonds and the US’s intention to impose tariffs of up to 25% on specific kinds of products.
Sector executives contend that Indian exports will lose their competitiveness in the absence of government assistance, particularly when compared to competitors offering better trade conditions or domestic subsidies.
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Industry Demands: RoDTEP and MSME Relief
Indian exporters are not sitting around doing nothing as the pressure mounts. In order to assist them stay afloat in the near future, they are advocating for emergency relief measures. The most important of these are:
- Expansion of the RoDTEP Scheme: The Remission of tariffs and Taxes on Exported Products (RoDTEP) program presently provides reimbursement for unrefunded embedded taxes and tariffs. Participants in the industry want it to be extended to include additional product categories and industries.
- Boosting the Interest Subvention Scheme (ISS): In order to maintain operations in spite of declining profit margins, exporters—especially those in the MSME sector are also looking for more generous interest subsidies on loans.
Both programs are viewed as vital lifelines while the industry waits for the conclusion of the US negotiations and negotiates an uncertain trading climate.
Short-Term vs. Long-Term Strategy
It’s interesting to note that some exporters think that before higher duties take effect, there may be a brief increase in shipments. According to one source, “if the tariff hike is confirmed but not immediately enforced, exporters may try to ship as much as they can during a 21-day window.” They warn, though, that if the tariffs are made permanent, there will be a steep drop after the initial rise.
Indian exports will be severely disadvantaged when compared to commodities from other manufacturing hubs like Bangladesh, Vietnam, and even Mexico, which have better market access terms, should the US’s planned 50% tax be put into effect.
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Government in Action
The Indian government isn’t doing anything. In order to determine which industries may accept additional concessions without jeopardising national interests, the Centre has initiated an intermenstrual initiative, as previously reported by The Indian Express. It is the responsibility of key economic ministries to analyse their businesses and determine where compromise is feasible.
A thorough bundle of proposals is anticipated to be the result of this process and will be given to the US negotiators upon their arrival in India on August 25.
Energy Trade: A Silver Lining?
Remarkably, bilateral energy commerce is still robust in spite of trade concerns. In 2025, India imported a significant amount of crude oil from the United States. 6.31 million tonnes of US crude oil were imported by India between January and April alone, a staggering 270% increase over the same period in 2024.
Given its growing reliance on US cotton supply, India may be able to use this as leverage in the negotiations. It also illustrates the more nuanced nature of US-Indian relations, where there are both strong economic differences and strategic cooperation.
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Conclusion
India must balance the urgent requirements of its exporters with its own national interests as it gets ready for crucial talks with the US later this month. Trade continuity may be ensured by concessions like duty-free US cotton and restricted agricultural quotas, but they must be carefully considered in light of long-term policy objectives and domestic sensitivities.
All eyes will be on India’s ability to reach an agreement that protects its economic interests while allowing for deeper commercial relations with a significant international partner, as the US delegation is scheduled to be in New Delhi by August 25.