Bangladesh's new trade deal with US worries Indian textile exporters
The US and Bangladesh just signed a new trade agreement, cutting the reciprocal US tariff rate on Bangladeshi goods to 19% from 20%.
Even bigger: the agreement commits to establish a mechanism under which certain Bangladeshi textiles made with American cotton or man-made fiber could enter the US at zero tariffs up to a to-be-specified quota tied to Bangladesh's imports of US textile inputs, and the measures require further implementation steps and domestic procedures before taking effect.
In exchange, Bangladesh will open its doors wider to American products like chemicals, machinery, and food items.
Bangladesh's edge over India to widen
This deal puts India's textile industry in a tough spot—Indian exports now face an 18% tariff in the US while Bangladesh's general reciprocal rate is 19%, although the agreement includes a mechanism that could allow a to-be-specified volume of Bangladeshi textiles made with US cotton or man-made fiber to enter the US at zero tariffs, subject to further implementation steps and a quota tied to Bangladesh's imports of US textile inputs.
After the news broke, shares of Indian textile companies like Gokaldas Exports dropped by up to 5%.
Trade expert Abhijit Das warns that what used to be India's slight edge is now a major disadvantage. Plus, with Bangladesh pushing for more free trade deals (like one with the EU), their position as a global textile powerhouse is only getting stronger—meaning more competition for Indian businesses and jobs.