India-US Trade Deal Reduces Tariffs on Indian-Manufactured Goods

Kolhapur: Terry towel manufacturers in Solapur expressed relief after they learnt that India and the United States had struck a trade deal, effectively reducing the tariffs imposed by the US to 18%.In Aug 2025, the US imposed a tariff of 50% on Indian-manufactured goods as a penalty for buying Russian oil. This was in addition to the existing 10% levy, especially on textile products, thereby taking the effective tariff to 60%.In a social media post, US President Donald Trump announced that the deal was struck to reduce the tariff to 18%. For many textile operators in Solapur, it was a happy moment, as for the past nine months, the export from Solapur to the US, which yields good returns, had stopped.Textile operators from Solapur produce good-quality terry towels, and their products range from bath towels, beach towels, and cotton towels. These products, required in hospitals, kitchens, and for personalised use, are in high demand in the US. Solapur terry towels also have the Govt of India's Geographical Indication tag.Raju Rathi, the president of Solapur Chamber of Commerce and Industry, told TOI: "Out of Rs 600-Rs 800 crore worth of terry towel exports, the export to the US alone is worth Rs 200 crore.Exports were halted after the tariffs were raised. We had to search for other markets, but ended up selling at a cheaper rate. However, we continued to keep the men and machines running. Now, we hope the deal gets inked as soon as possible.Meanwhile, we will open links with the exporters and ensure the supply to the US resumes."Rathi said that the 18% tariff is advantageous in comparison to competitors, especially the neighbouring nations, which have struck deals of 19% to 20% tariff with the US, providing India an advantage of 1% to 2%.There are 16,000 powerlooms in Solapur city, of which 12,000 produce terry towels. The city also has 2,000 rapier and 200 airjet machines, facilitating rapid and large-scale production. The daily towel production capacity of the looms here is 2 lakh kg per day, and around 60% of the towels are exported, with the US being the largest importer, followed by European countries."Now we can expand production. The manufacturers should invest more and expand their capacity, as a major market is going to reopen.The recent Union Budget gave several sops to industry, in addition to the subsidies implemented to cushion the losses due to the tariff war," said Rathi.After agriculture, textile is the second-largest sector with the highest employability. According to rough estimates, around 40,000 people, nearly half of them women, are employed in Solapur's terry towel-making industries.Farmers' leaders want PM to stay firm on his commitmentA few months ago, when the tariff war was at its peak, Prime Minister Narendra Modi had said he would not compromise on the welfare of the farmers.The US President, however, announced that India had agreed to let US agro produce into Indian markets with zero duty. The US wants maize and soyabean produced there to enter the Indian market, especially after its ties with China, the largest consumer, soured.Raju Shetti, former MP and leader of Swabhimani Shetkari Sanghatana, said, "Since the start, the unions had cautioned govt about the US's attempt to sell their agricultural produce at a cheaper rate to India.The farmers there grow maize (corn) and soyabean at a much lower cost, mainly due to high-yielding genetically modified seeds and advancements in agricultural machinery. On both fronts, farmers from Marathwada and Vidharbha are handicapped.We want PM Modi to come clear on the claim made by Trump. If our govt signs such a deal, then there will be resistance from farmers across the country."Last year, Indian farmers in India produced a record 152.7 lakh tonnes of soyabean, 434 lakh tonnes of maize, and 300 lakh bales, each of 170 kg, of cotton."We expected that Govt of India would reach out to China to get a market for the maize and soyabean we produce, since the demand is huge in China. However, this govt seems to have misplaced priorities," said Shetti.In the Jan-Dec 2025 calendar year, textile and apparel exports remained stable at US$37.5 billion, with notable cumulative growth in handicrafts (17.5%), readymade garments (3.5%), and jute products (3.5%).A key highlight of 2025 has been significant market diversification. During Jan–Nov 2025, India's textile sector recorded export growth across 118 countries and export destinations.India is the sixth largest exporter of textiles and apparel in the world, with a 4.1% share in the 2024 calendar year. The textile and apparel sector, including handicrafts, contributed 8.6% to India's total merchandise exports in 2024-25, valued at US$37.7 billion. While the USA was India's largest export market, accounting for 28.9% of textile and apparel exports, it represented only 6% of the overall Indian textile industry.