U.S.-Bangladesh trade agreement a cause of concern for Indian apparel exporters

U.S.-Bangladesh trade deal causes concerns among Indian apparel exporters, impacting India's cotton yarn market.

The U.S.-Bangladesh Agreement on Reciprocal Trade has led to concerns among Indian textile and apparel exporters who were looking forward for a competitive advantage over Bangladesh with the 19% tariff for Indian goods in the U.S. because of the interim trade deal between India and America.

According to the U.S.-Bangladesh Agreement on Reciprocal Trade, “The United States commits to establish a mechanism that will allow for certain textile and apparel goods from Bangladesh to receive zero reciprocal tariff rate. This mechanism will provide that a to-be-specified volume of textile and apparel exports from Bangladesh can enter the United States at this reduced tariff rate, but this volume shall be determined in relation to the quantity of exports of textiles, eg. U.S. produced cotton and MMF textile inputs, from the US.”

ALSO WATCH U.S.-Bangladesh trade deal cuts export tariff to 19%

India exported $1.47 billion worth cotton yarn (570 million kg) to Bangladesh, which is the biggest destination for Indian yarn, in 2024-2025. It shipped 12-14 lakh bales of cotton to Bangladesh last year. Almost 20% of Bangladesh’s garment exports and 26% of India’s cotton apparel exports are to the U.S.

“I fear that the immediate impact will be on Indian cotton yarn as Bangladesh can buy U.S. cotton and spin at its textile mills,” said Chandrima Chatterjee, secretary general of the Confederation of Indian Textile Industry.

“A Bangladesh exporter can use 10% U.S. cotton and claim that he has used 100% U.S. cotton. How will the U.S. determine traceability of the raw material ? As Bangladesh is very strong in apparels, we may stand to lose,” said K.M. Subramanian, president of the Tiruppur Exporters Association.