US–Bangladesh Trade Pact Triggers Worries for Indian Apparel Exporters

A recent trade agreement between the United States and Bangladesh has raised concerns among Indian textile and apparel exporters, who fear the deal could erode India’s competitiveness in one of its key overseas markets. Industry representatives say the new arrangement gives Bangladeshi manufacturers a pricing edge that may divert orders away from Indian firms.

The agreement provides preferential access to Bangladeshi apparel exports to the US, including provisions that allow certain garments made using American raw materials to enter the US market at reduced or zero duty. Exporters in India argue that this could significantly lower production costs for Bangladeshi suppliers, enabling them to offer cheaper products in a market where price sensitivity plays a crucial role. India’s apparel exports to the US continue to attract import duties, placing domestic manufacturers at a relative disadvantage. While India has secured some tariff relief under its own trade engagement with Washington, exporters say the concessions offered to Bangladesh are more favourable, particularly for ready-made garments. This has intensified fears of losing market share in segments where India and Bangladesh directly compete.

Another major concern is the potential impact on India’s cotton and yarn exports. Bangladesh is a large importer of cotton and has traditionally sourced substantial quantities from India. With the new agreement encouraging the use of US-origin cotton for duty-free exports, Indian suppliers worry that Bangladeshi buyers may shift procurement away from India, affecting demand for raw materials and intermediate goods.The market reaction has reflected these anxieties. Shares of several Indian textile and apparel companies have come under pressure, as investors factor in the possibility of reduced orders and tighter margins. Industry bodies have warned that even a modest shift in sourcing decisions by global brands could have a ripple effect across India’s textile value chain.

Trade experts note that Bangladesh already enjoys a strong position in the global garment industry due to lower labour costs and large-scale manufacturing capabilities. Additional tariff advantages in the US market could further strengthen its appeal to international buyers, particularly for mass-market apparel.

However, some analysts believe the impact on India may be limited in the medium term. They point out that India has a more diversified textile industry, with strengths in yarn, fabrics, technical textiles and higher-value products. Indian exporters also have a wider geographic spread, with significant exposure to European and other markets. Even so, industry leaders are urging the government to closely engage with US authorities and explore ways to safeguard Indian exporters’ interests.