Textile trap: Why India should be concerned over US-Bangladesh deal?
India Today
The US-India trade deal was met with cheers by Indian textile exporters as it gave them an advantage over their competitors, like Pakistan and Bangladesh. However, the trade deal with Bangladesh seems to have undercut India's position. Here's how the agreement impacts India.
The US slashed tariffs on Bangladesh to 19% as the countries announced a trade deal on Monday, a week after a pact was reached with India. The deal placed India among the countries facing one of the lowest tariff rates (18%) from the Trump administration, down from a crippling 50%. It was met with cheers by Indian textile exporters as the deal gave them an advantage over their competitors like Bangladesh, Pakistan (19%), Vietnam (20%) and China (30%). However, the fine print of the US-Bangladesh trade deal seems to have unsettled textile exporters and cotton traders as well. Stay with us, and we will explain how in simple terms.
Apart from lowering tariffs from 20% to 19%, the US has given a breather to Bangladesh's textile industry, its lifeline, by allowing certain exports to enter America at zero duty. However, this will only apply to those goods produced with American cotton and man-made textiles. This move may undercut India's position in the US apparel market.
Notably, the US is the top market for India's textile exports. Thus, when Trump reduced tariffs on Indian exports to 18%, there was considerable joy in the textile industry. Not only did it unlock the US's $118 billion market for textiles and apparel, but it also strengthened India's position in global supply chains.
The US already accounts for around $10.5 billion of India's textile exports. Around 30% of all textile and apparel shipments from the country go to the US. Following the imposition of 50% tariffs, the textiles sector, which contributes 2.3% to India's GDP, not only registered a dip in exports but also was plagued by a massive inventory pile-up.
In fact, data shows that textile exports to the US fell by over 31% year-on-year in November 2025. Against this backdrop, amid slowing shipments and job losses, the US-India trade deal came as a silver lining for the textile sector.
However, the US-Bangladesh trade agreement may upend that advantage for India. Even though India's overall tariff rate is lower than that of Bangladesh, the zero-tariff provision for Bangladeshi garments made using American cotton completely changes the competitive equation.
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