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Currently, the US levies import duties ranging from 7 per cent to 16.5 per cent on various garment categories under specific HSN codes. In comparison, India imposes a 20 per cent basic customs duty and a 10 per cent social welfare surcharge on imported garments.
India’s Apparel Export Promotion Council (AEPC) is working closely with the government to prepare a strategy for the country’s apparel exports to the US. A detailed analysis has been presented by the export promotion organisation to the government to explain the disparity between the tariffs imposed by both countries. A letter was sent to the Ministry of Textiles by AEPC at the beginning of this month.
The export promotion council and other industry bodies have been advocating for a ‘zero for zero’ duty policy on textiles and apparel. The industry has argued that the government should reduce duties on textile products to zero per cent, which would prompt the US to apply the same tariff rate on Indian exports. The industry is confident that such strategies will help gain a larger market share in the world’s largest economy.
US Assistant Trade Representative Brendan Lynch and India’s Additional Secretary at the Ministry of Commerce, Rajesh Agrawal, are conducting detailed discussions in New Delhi to develop a mutually agreed plan for tariff adjustments. The US is urging India to reduce high tariff barriers on all American goods, while expressing willingness to consider mechanisms such as quota restrictions to address India’s concerns regarding farmers and small industries.
It is hoped that both countries will reach a consensus on a trade agreement. However, if not, the US may increase tariffs to match India’s rates. India currently imposes a 20 per cent customs duty and a 10 per cent social welfare surcharge. AEPC has also noted that the IGST should be considered part of the overall tariff charged by India. If included, the total tariff could range from 35 per cent to 42 per cent, as 5 per cent IGST is levied on garments valued below ₹1,000 per piece. For garments valued above this threshold, the IGST rate is 12 per cent.
The US imposes tariffs as a percentage of value under its most favoured nation (MFN) rates. For example, the country imposes tariffs between 5.5 per cent and 11.80 per cent on women’s cotton dresses (HSN code 620442). Indian exports face an average MFN tariff of 8.57 per cent for this item. In the US, some states impose local sales taxes according to their respective tax and economic policies, while others do not have any such sales tax or GST. It is hoped that reciprocity will apply only to duties payable at ports.
AEPC Chairman Sudhir Sekhri has urged the government to convert this imminent threat into an opportunity by negotiating zero tariffs for apparel exports.
Fibre2Fashion News Desk (KUL)