India’s trade community is closely watching the newly concluded US-Bangladesh trade agreement, with stakeholders expressing concern that Dhaka’s preferential access to the American market could intensify competition for Indian exports — particularly in the textile and apparel sectors.
Under the pact signed by Bangladesh and the US this week, Dhaka secured a reduction in reciprocal tariffs to 19 per cent on a broad range of exports, along with zero-tariff access for selected garment and textile products manufactured using US cotton and man-made fibres, a move that could make Bangladeshi apparel cheaper and more competitive in the world’s largest consumer market.
The tariff changes follow months of negotiations and come against the backdrop of broader US trade engagement in South Asia, including a separate Indo-US deal that reduced Indian tariffs to 18 per cent. While India’s overall tariff rate is technically lower, the Bangladesh agreement’s specific zero-duty provisions for certain textiles are seen as shifting the competitive landscape.
Textiles account for a significant portion of South Asia’s trade with the United States, and although India’s total shipments remain far higher than Bangladesh’s, the zero-tariff clause for garments made with US inputs could erode segments of India’s market share in the coming months. The deal also has implications for India’s role in Bangladesh’s supply chain.
Historically a major supplier of cotton and intermediate textile inputs to Bangladeshi producers, India may face a shift in sourcing patterns if Dhaka elects to import more US cotton to qualify for preferential access under the new arrangement. This raises concerns among cotton traders and apparel exporters about potential disruptions to existing commercial linkages.
Indian political voices have already seized on the development, arguing that the zero-duty textile provision under the Bangladesh pact places Indian exporters at a disadvantage and may hurt both cotton farmers and textile workers.
Congress leader Jairam Ramesh said India had been forced to concede more than what it had got.
“It did not take long for US President Trump and his team to puncture the tall claims being made by the PM and his many megaphones on the Indo-US trade deal. Clearly, the US’ understanding of the deal is very different from the propaganda that is being put out by the Modi government. This is not a calibrated opening but a coerced opening. And now our much-touted advantage over Bangladesh in textile exports to the US has vanished with the details of the US-Bangladesh trade deal also having just been announced,” Ramesh said.
Trade experts say the full impact will depend on implementation details and how quickly Bangladeshi manufacturers can scale up exports to the US under the new terms.
India’s own trade negotiations with the US and other partners, including expanded market access under recent agreements with Washington and the European Union, could help mitigate competitive pressures if those terms are effectively leveraged.
