Unusual Delhi: The US-Bangladesh reciprocal commerce agreement lets in zero tariffs on attire and textile exports to the US if the manufacturer uses American cotton or man-made fibre inputs.
This provision has raised concerns, but India’s textile industry expects the affect to be restricted.
A Mumbai-basically based exporter mentioned preliminary estimates suggest that Bangladesh would make handiest marginally, around 2-3%, despite the truth that it replaces Indian cotton with US provides. The elevated fee of US cotton would wipe out most to the tariff advantage they reckon.
“US cotton is much more expensive by the time it reaches Bangladesh, whereas India has a geographical advantage.”
Furthermore, Bangladesh’s dependence on imported cotton and man-made fibre, energy constraints, and the time and label serious about sourcing US inputs and realigning supply chains would restrict the instantaneous affect of the tariff provision on Indian exports, they mentioned.
Beneath the agreement, the US has slice tariffs on Bangladesh goods to 19% from 20% and can even keep a mechanism allowing a specified volume of textile and attire imports from Bangladesh at a nil reciprocal tariff, with the quota linked to US exports of textile inputs equivalent to cotton and man-made fibres. “This mechanism will provide that a to-be-specified volume of apparel and textile imports 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, e.g. U.S. produced cotton and man-made fiber textile inputs, from the United States,” the joint assertion issued Monday mentioned. Bangladesh’s readymade garment sector employs around 4 million workers, contributes about 10% to its injurious domestic product and accounts for over 80% of export earnings.
Bangladesh is India’s top destination for cotton exports. India’s cotton shipments to Bangladesh rose 18.3% to $2.8 billion in FY25 from $2.4 billion in the 365 days before, whereas exports of cotton to the US elevated 10.3% to $105.1 million over the an identical interval.
The US has diminished tariffs on Indian goods to 18% from 25% and withdrawn the further 25% levy imposed for getting Russian oil. Nevertheless, some exporters cautioned that the US-Bangladesh diagram would possibly maybe well well well silent divert some garment orders from India to Bangladesh. They immediate India would possibly maybe well well well goal silent look a an identical diagram for Indian textiles to the extent of cotton imported from the US.
“We have requested the Indian government to receive the tariff advantage on whatever American cotton the Indian industry uses,” the Mumbai-basically based exporter mentioned. Whereas India’s export of textile and allied merchandise to the US fell by 6.1% 365 days-on-365 days between April-November FY26 to around $6 billion, shipments to other countries rose over the an identical interval, making up the autumn. Total, such exports were up 0.3% over this interval from a 365 days earlier.
