Bangladesh will replace Indian cotton with U.S. cotton: Interim government

Bangladesh shifts from Indian to U.S. cotton, boosting its textile sector through a new trade deal, says information adviser.

Bangladesh will replace Indian cotton with U.S.-produced cotton as a result of the U.S.-Bangladesh trade deal that was inked on Monday (February 9, 2026), said a spokesperson for the interim government in Dhaka. Speaking to The Hindu exclusively, Shafiqul Alam, information adviser to Chief Adviser Mohammed Yunus, said the trade deal is a “game changer” that can provide Bangladesh with greater access to the U.S. market. Leading economist Professor Selim Jehan of BRAC University in Dhaka said the deal has made Bangladesh’s cotton market “attractive” for the U.S. but cautioned that Bangladesh should ensure that the U.S. cotton is of high quality.

“We have got a tariff rate of 19% in the new trade deal with the U.S., which is good compared to our rivals like Cambodia and Indonesia but a clause in the deal has given us greater advantage as the U.S. has agreed to reduce tariff to zero if our textile producers switch to U.S. cotton or manmade fibre,” said Mr. Alam, describing the trade deal as a “big boost” for Bangladesh’s textile sector.

Mr. Alam said that Bangladesh traditionally imports cotton from India and Central Asia as it does not produce the cotton or yarns necessary for its large textile sector. However, this shortcoming has also helped it negotiate with the U.S. more freely as Bangladesh does not have any cotton farmer lobby that could have pressured the government. Cotton and cotton yarn supplies from India and export of Bangladesh’s textile products to India came to the spotlight in April-May 2025 when both sides imposed tit-for-tat restrictions on the movement of the items. Bangladesh restricted import of yarn from India through its land ports through an order dated April 13, 2025.

India exported to Bangladesh cotton yarn worth $1.6 billion in 2024 and manmade fibre (MMF) yarn worth nearly $85 million. A substantial volume of yarn goes through land ports. Bangladesh is one of the largest importers of Indian cotton. After relation between the two countries nosedived in July-August 2024, on May 16, 2025, India imposed curbs on import through land ports of several items which included readymade garments, the largest export item from Bangladesh to India. Bangladeshi authorities have said that they will now shift focus to the market in the U.S., which is the largest textile market for Bangladeshi manufacturers.

Professor Selim Jehan acknowledged that the trade agreement has “undoubtedly” created a market in Bangladesh for raw cotton from the U.S., but also cautioned that the agreement has “restricted Bangladesh as it will prevent Bangladesh from exploring rival cotton producing countries”.

“It appears at first that if Bangladesh produces textile products using raw cotton from the U.S., then Bangladesh will save money as the 19% tariff will be reduced to zero. But then, we also have to combine the amount to purchase U.S. cotton with freight charges, transportation, etc., to see if ultimately it amounts to a profitable bargain,” Professor Jehan told The Hindu.