US-B’desh deal: India’s garments exports face limited threat
Days after India secured a favourable tariff outcome for textiles under its interim trade arrangement with the US, a fresh variable has emerged -- Washington’s trade deal with Bangladesh.
Under the Bangladesh pact, the US has lowered the general tariff from 20% to 19% (compared with India’s 18%). More significantly, the US has agreed to cut tariffs to zero on select Bangladeshi garment and apparel products, provided the cotton used is sourced from the US.
Industry voices say this conditional zero-duty window could disrupt cotton and yarn trade flows in the region, even if India’s finished garment exports remain largely insulated.
K M Subramanian of the Tiruppur Exporters’ Association (TEA) said the zero-duty provision could affect cotton garment exports. “If this materialises, we would request the government to re-negotiate aspects of the trade deal with the US,” he said, adding that the benefit is not exclusive to Bangladesh and could, in principle, be extended to others meeting the sourcing condition.
Bangladesh exports about $7.5 billion worth of apparel to the US, while India ships around $10.5 billion of textiles and apparel.
The Confederation of Indian Textile Industry (CITI) flagged a two-fold challenge. Chairman Ashwin Chandran said, “First, the tariff gap between India and Bangladesh has narrowed from 2 percentage points to 1 percentage point, which matters in a low-margin sector. Second, the US-Bangladesh agreement could adversely affect India’s cotton yarn exports to Bangladesh.”
Commerce Ministry data show India exported cotton yarn worth Rs14,802 crore in FY25.
However, some industry leaders see the development as a near-term disruption rather than a structural setback.
Apparel Export Promotion Council (AEPC) Chairman Dr A. Sakthivel said India could potentially access similar benefits if it agrees to source cotton from the US. “Overall, the impact on the textile industry is negligible. India still enjoys an 18% tariff, lower than Bangladesh’s 19%. We already import long-staple and extra-long-staple cotton from the US, which is not widely produced domestically,” he said.
He added that garment exports are unlikely to be affected in the immediate term as US buyers continue to place orders with Indian exporters for quality and reliability.
Atul Ganatra, CMD of Radhalakshmi Group and mentor at the Cotton Association of India, said the pressure would be felt more in raw cotton and yarn shipments. “Apparel exports may not be affected, but cotton and yarn shipments could take a hit. The extent will become clear in a few days,” he said.
India exports 16–18 lakh bales of cotton to Bangladesh annually, according to the association. The country also has an estimated surplus yarn capacity of around 30%, with Bangladesh being a key buyer.
Ganatra noted that Bangladesh’s power and operating costs are higher than India’s, giving Indian manufacturers a cost advantage. He also pointed to uncertainty over how much cotton the US can supply to Bangladesh, especially as American exporters seek new buyers after China reduced purchases.
India’s annual cotton consumption is about 305 lakh bales against total availability of roughly 410 lakh bales. Exports stand at around 15 lakh bales a year.
He added that even if sourcing patterns change, cotton and yarn shipments typically take three to four months to reach Bangladesh, suggesting any trade shift would play out gradually rather than immediately.