Kamal Ghorui
The United States is important because Americans buy a lot of things. This year alone, they will spend about $370 billion on clothes—that’s more than the value of all the cars sold in India. But here’s the surprising part: even though India is one of the world’s biggest makers of clothes, our share in the American market is still small—only about 6%. Ten years ago it was 4%, so we grew, but not as fast as we could have. During the same time, China’s share dropped, and Vietnam grabbed most of that business. Even though US experts say India makes good-quality clothes with nice finishing, we still couldn’t sell as much as we should have.
Why? Mostly because our costs go up. For example, when India puts taxes on imported cotton to protect farmers, our T‑shirts become more expensive in global markets. And buyers usually choose the cheaper option.
In the last two years, India has signed many free-trade agreements (FTAs) with countries like the UAE, Australia, EFTA, the UK, New Zealand, and now the European Union and the United States. These deals can remove extra taxes and make it easier to buy and sell goods. This marks a major shift. For a long time after Independence, India was more afraid of foreign products. The thinking was: we won’t buy too much from others. But now the attitude is changing to: we will sell more to the world.
The deal with the US under President Trump is a big example of this. To make it work, India had to stop buying cheap oil from Russia for now. It sounds like a loss, but in the bigger picture, it makes sense. Saving just $2 on a barrel of oil is nothing compared to getting access to a $30 trillion American market that buys not just shirts, but also phones, shoes, coffee, furniture, and auto parts.
And if the Ukraine war ends soon—something Trump says he hopes to achieve by June—India may again be able to buy Russian oil freely.
Look at the mobile phone industry in India. We exported $50 billion worth of phones last year. This happened because we lowered or removed many taxes on the parts needed to make phones. If India had kept high taxes on imported components, our phone exports would never have grown so quickly. This shows a simple lesson: To become a big manufacturing country, India must connect more closely with global supply chains.
India has 18% of the world’s population, but only less than 2% of global trade. China, with the same population size, controls 20% of global trade. Why the difference? Because China became the world’s manufacturing hub. For India to raise people’s incomes, we also need more manufacturing jobs. Right now, half of India’s people work in farming. In rich countries like the US, only about 1% of people farm. So India has too many people depending on agriculture, and too few in factories.
This is why trade reforms matter. If India keeps protecting farming with high tariffs forever, we can’t shift people into better-paying industrial jobs.
It’s natural that farmers worry about the new US deal. Change is scary. But instead of delaying progress, the government should support farmers through this transition so that India can grow and compete globally.
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