Why Bangladesh's zero-duty US access is worrying Indian textile exporters
What's the story
The recent US-Bangladesh trade agreement has raised concerns among Indian textile exporters. The deal, which was signed on February 9, reduces the reciprocal tariff on Bangladeshi goods from 20% to 19%. It also allows certain textiles and apparel made with US-produced cotton from Dhaka to enter the US market duty-free.
Export comparison
India's cotton yarn exports to Bangladesh may be hit
In the April-November period of 2025, Bangladesh's ready-made garment exports to the US were around $7.6 billion. This is more than double India's $3.26 billion in the same period. The Confederation of Indian Textile Industry (CITI) chairperson Ashwin Chandran expressed concerns over this development, saying it could negatively impact India's cotton yarn exports to Bangladesh and has halved the tariff differential between India and Bangladesh from 2% to 1%.
Demand for parity
Indian textile exporters demand same concessions for their garments
Indian textile exporters are now demanding the same concessions for their garments made with US cotton. Tirupur, India's largest knitwear and cotton textile hub, has called for similar concessions to support Indian exports. Tirupur Exporters's Association president Kumar Doraiswamy said granting a tariff exemption for garments made with US cotton would boost export growth without hurting domestic farmers.
Sector analysis
Bangladesh's ready-made garment sector heavily relies on imported raw materials
The ready-made garment sector contributes over 10% to Bangladesh's GDP and employs around four million workers. The US is its largest export market. India has been a major supplier of cotton and yarn to Bangladesh, which heavily relies on imported raw materials for its export-oriented garment industry. However, if Bangladeshi manufacturers start using US-origin fiber to qualify for tariff benefits, it could affect demand for Indian raw material exports.
Market reaction
Indian textile stocks react negatively to the news
Indian textile stocks reacted negatively to the news of the trade deal, with shares like Gokaldas Exports, Welspun Living, Arvind, KPR Mill falling between 3.3% and 4.5%. Experts believe that while this deal could make Bangladesh more competitive in the global market, it may not have a massive impact on India's textile industry in the long run.