India still eyeing US trade deal as Trump tariffs hit cotton badly

NEW DELHI/MUMBAI: As the 50 per cent tariffs imposed by President Donald Trump hit India badly, Trade Minister Piyush Goyal said on Tuesday that New Delhi was in talks with Washington for a bilateral trade agreement.

The statement comes as India is already feeling the heat amid the Trump tariffs, with manufacturers reducing production to adjust themselves to the effects on $87 billion Indian exports.

IT’S GETTING LATE

Earlier on Monday, Trump said India had offered to reduce its tariffs on US goods to zero.

Read more: India offered zero tariffs but it’s getting late: Trump

While calling the US relationship with India “one sided”, Trump wrote on his Truth Social platform: “They have now offered to cut their Tariffs to nothing, but it’s getting late. They should have done so years ago.”

TEXTILE HIT

Amid the economic upheaval, India is expected to purchase a record volume of cotton from farmers in the upcoming season, as domestic prices face pressure from cheaper imports and weakening demand following hefty US tariffs on textile exports, industry officials told Reuters.

Cotton consumption in the world’s second-largest producer has slowed, with exporters reporting a sharp decline in orders from the United States, which accounts for nearly 29 per cent of India’s $38 billion in annual textile exports.

“Demand has slowed down, and that’s hurting the industry. In this kind of market, farmers are unlikely to get the promised support price for their cotton,” Atul Ganatra, president of the Cotton Association of India, told Reuters.

The government will have to step in and buy a record amount of cotton — maybe around 14 million bales, Ganatra said.

SUPPORT PRICE INCREASED

India has raised the price at which it will buy new-season cotton from domestic farmers by 7.8 per cent to 8,110 rupees per 100 kg, but local market prices are hovering around 7,000 rupees.

Prices are expected to come under pressure from next month due to rising supplies from the new season’s crop and the arrival of cheaper imported cotton, said Pradeep Jain, a ginner based in Jalgaon in the western state of Maharashtra.

Read more: No more the best friend: India targets Trump after May 10 debacle

Last week, India extended an import duty exemption on cotton by three months, until the end of December.

Farmers usually sell their crop to the state-run Cotton Corporation of India (CCI) whenever prices fall below the government-set floor price.

In the 2024/25 marketing year, which ends this month, CCI spent a record 374.36 billion rupees to buy 10 million bales from farmers.

“There is no limit or target for buying cotton from farmers in the new season. We will buy the entire quantity that farmers bring to CCI,” Lalit Kumar Gupta, managing director of CCI told Reuters.

Read more: Trump tariffs take effect, India-US rift deepens

The CCI is planning to increase the number of procurement centres by 10 per cent to 550 in the new season and has the capacity to purchase more than 20 million bales, Gupta said.

In December quarter, India could import more than two million bales, said a New Delhi-based dealer with a global trade house.

“Imported cotton is not only cheaper but also better in quality. So, textile mills will be busy using it even when local supply is at its peak, which will push down domestic prices,” the dealer said.