Impact of US-Bangladesh Trade Deal on Indian Textile and Apparel Industry

Overview

The US-Bangladesh trade agreement is perceived as a double-edged sword for Indian textile exporters due to reduced reciprocal tariffs on Bangladeshi goods, impacting India's market competitiveness.

Key Concerns

• The tariff differential between India and Bangladesh in the US market has halved from 2% to 1%.
• The US established a mechanism for zero reciprocal tariffs on specific Bangladeshi textile imports, potentially affecting India's cotton yarn exports.
• India's cotton yarn exports to Bangladesh might face challenges due to US cotton import advantages for Bangladesh.
• Bangladesh, a major garment manufacturer, remains India's competitor in US textile and apparel markets alongside China and Vietnam.

Potential Opportunities

• Bangladesh's spinning and fabric industry cannot meet its entire yarn and fabric demand, providing an opportunity for Indian exports.
• India's integrated textile ecosystem and substantial spinning capacity could leverage zero-duty concessions for garments using US cotton.

Trade Figures

• From January to November 2025, India exported textiles worth $9.06 billion to the US, while Bangladesh's exports were $7.77 billion.
• Notably, Indian imports to the US saw a decline of 5%, 30.1%, and 31.4% in September, October, and November, respectively, but a 2.3% increase from January to November.

Government and Industry Responses

• A government official emphasized assessing the agreement holistically, recognizing areas where India secured greater market access.
• CITI's chairman expressed concerns over the narrowed tariff differential and potential adverse effects on India's cotton yarn exports.