3 months ago
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The communicative truthful far: In the U.S.-Bangladesh Agreement connected Reciprocal Trade, signed connected February 9, the U.S. has committed to “establish a mechanics that volition let for definite textile and apparel goods from Bangladesh to person a zero reciprocal tariff rate”. A connection from the White House said this mechanics volition supply for a to-be-specified measurement of apparel and textile imports from Bangladesh to participate the U.S. astatine this reduced tariff rate, but that the measurement shall beryllium determined based connected the usage of U.S. produced fabric and MMF (man-made fibre) textile inputs. Following concerns successful the Indian textile and garment industry, which is the largest employment generator aft agriculture, Indian Minister for Commerce and Industry Piyush Goyal said that India is to person the aforesaid installation arsenic Bangladesh, and that Indian garment and textile exporters volition besides benefit.
Also Read | India’s textile exports to U.S. volition get aforesaid benefits arsenic Bangladesh: Piyush Goyal
What does information of the countries indicate?
Of the full imports of $16.1 cardinal of textile inputs by Bangladesh successful 2024, $3.1 cardinal went from India. Bangladesh imports astir 85 lakh bales of fabric annually, chiefly from Brazil, India, and African countries for its astir 500 spinning mills. India exported 12-14 lakh bales of fabric to Bangladesh successful 2024-25, of its full accumulation of astir 300 lakh bales. It besides shipped $1.47 cardinal worthy of fabric yarn (570 cardinal kg) to Bangladesh, which was the biggest destination for Indian yarn, successful 2024-25. Bangladesh buys much yarn and cloth from different countries than the basal earthy worldly — fibre, according to a study by the Global Trade Research Initiative (GTRI). Bangladesh exported $50.9 cardinal successful garments globally successful 2024, and of it, $7.4 cardinal went to the U.S.
Of the yearly garment exports of $16 cardinal from India, astir one-third goes to the U.S. At present, planetary fabric prices (landed cost) person a 2% to 8% terms difference, depending connected the state of root and the buying country.
Also Read | Indo-U.S. commercialized woody volition destruct India’s textile industry: Rahul
Will commercialized dynamics tilt towards Bangladesh?
Indian textile and garment exporters consciousness things volition not alteration instantly oregon overmuch due to the fact that of the U.S.-Bangladesh deal. A GTRI study notes that implicit 63%, oregon $32.3 billion, of Bangladesh’s garment exports went to the European Union, duty-free. Since the EU is Bangladesh’s main market, its garment proviso chains are built to service European buyers.
Bangladesh’s garment manufacture depends heavy connected imported textile inputs, particularly yarn and fabric, for making garments. To suffice for zero tariffs of the U.S., Bangladesh should regenerate long-established suppliers and put heavy successful caller spinning and fabric-processing capacity, which it presently lacks. According to the Cotton Textiles Export Promotion Council, the Bangladesh textile manufacture should alteration its merchandise premix and realign its earthy worldly proviso chains to payment from the usage of American cotton. Its textile mills are already successful a crisis, accidental Indian yarn exporters.
Also Read | U.S.-Bangladesh commercialized statement a origin of interest for Indian apparel exporters
What is the grade of India-U.S. fabric trade?
India imports adjacent to 5 lakh bales of U.S. fabric annually, of which 2.5 lakh bales are of other agelong staple (ELS) fabric and the different 2.5 lakh bales are non-ELS cotton. India is 1 of the starring users of American PIMA cotton, which is simply a premium ELS variety. Several Indian textile mills are already nominated by American brands to proviso yarn made of American fabric for garments. India presently levies 11% import work connected cotton, but for ELS cotton. Indian garment exporters volition get akin entree to the U.S. marketplace arsenic Bangladesh exporters, Mr. Goyal has said.
Also Read | Bangladesh plans to displacement from Indian to U.S. cotton
What are the concerns?
While Indian goods volition pull 18% reciprocal tariff successful the U.S., goods from Bangladesh volition pull 19% from the earlier 20%. Thus, the U.S. tariff quality betwixt India and Bangladesh has halved with the U.S.-Bangladesh agreement. Bangladesh is already among the starring exporters of textiles and apparel to the U.S., alongside China, Vietnam, and India. Both, India and Bangladesh marque predominantly cotton-based apparel.
Shafiqul Alam, accusation advisor to Chief Adviser Mohammed Yunus, told The Hindu that Bangladesh has traditionally imported fabric from India and Central Asia arsenic it does not nutrient the fabric oregon yarns indispensable for its textile sector. It volition regenerate Indian fabric with U.S.-produced fabric arsenic a effect of the U.S.-Bangladesh commercialized deal, helium said. The contiguous interaction is apt to beryllium connected Indian fabric and yarn exporters. However, Indian exporters inactive person a batch of unanswered questions, specified arsenic if the U.S.-India statement does springiness Indian garment exporters a akin installation to the U.S. market, volition the Indian authorities waive the import work connected U.S. cotton? Will it let circumstantial quantities to beryllium imported by India duty-free?
Also Read | Export of method textiles spot a dip successful April - October 2025
Will determination beryllium benefits for garment exporters buying American cotton?
There is each anticipation of U.S. fabric prices firming up erstwhile request increases. If fabric is disposable from immoderate different state astatine a little cost, volition U.S. customers find it outgo competitory to bargain garments made from U.S. cotton? There is besides nary clarity connected however the U.S. volition find the quantity of U.S. fabric successful a garment oregon textile product. Both India and Bangladesh garment exporters volition get alleviation lone from the reciprocal tariff if they usage U.S. fabric and not the basal duty. While waiving of tariff by the U.S. for products made from U.S. fabric oregon MMF volition surely payment Indian garment exporters, they are hoping the Indian authorities volition germinate a strategy that volition instrumentality into information each the applicable implications and necessities for the effectual cognition of specified a facility.
