Responding to issues over India’s textile and attire trade, which is the biggest employment generator after agriculture, India’s Commerce and Trade Minister Piyush Goyal stated India would have the identical amenities as Bangladesh and Indian textile and textile exporters would additionally profit. File photos are used for illustration solely. |Photograph offered by: Reuters
Story to date: Within the U.S.-Bangladesh Reciprocal Commerce Settlement signed on February 9, the US dedicated to “establishing a mechanism that can enable sure textile and attire merchandise from Bangladesh to obtain zero reciprocal tariff charges.” A White Home assertion stated the mechanism would enable a certain quantity of clothes and textile merchandise from Bangladesh to be imported into the US at lowered tax charges, with the quantity decided primarily based on U.S. cotton and MMF (man-made fiber) textile inputs. Responding to issues over India’s textile and attire trade, which is the biggest employment generator after agriculture, India’s Commerce and Trade Minister Piyush Goyal stated India would have the identical amenities as Bangladesh and Indian textile and textile exporters would additionally profit.
What does the nationwide knowledge present?
Of Bangladesh’s whole textile imports of $16.1 billion in 2024, $3.1 billion got here from India. Bangladesh imports about 8.5 million bales of cotton yearly, primarily from Brazil, India and African international locations, for its almost 500 spinning mills. India exported 120-1.4 million bales of cotton to Bangladesh in 2024-25, out of Bangladesh’s whole manufacturing of about 3 million bales. It additionally shipped cotton yarn (570 million kg) value $1.47 billion to Bangladesh, the biggest vacation spot for Indian yarn, from 2024 to 2025. In keeping with a report by the World Commerce Analysis Initiative (GTRI), Bangladesh buys extra yarn and material from different international locations than it buys textiles, that are primary uncooked supplies. Bangladesh will export $50.9 billion of clothes to the world in 2024, of which $7.4 billion went to the US.
Of the $16 billion in annual clothes exports from India, almost one-third goes to the US.At present, the worldwide worth (landed value) of cotton varies by 2% to eight% relying on the nation of origin and the nation of buy.
Will commerce traits be tilted in the direction of Bangladesh?
Indian textile and clothes exporters really feel that the US-Bangladesh deal is not going to change the state of affairs shortly or considerably. The GTRI report factors out that greater than 63% of Bangladesh’s clothes exports, or $32.3 billion, went to the European Union duty-free. The EU is Bangladesh’s principal market, so its clothes provide chain is constructed to serve European patrons.
Bangladesh’s garment trade depends closely on imported textile merchandise, particularly yarn and material, for the manufacture of clothes. To qualify for U.S. zero tariffs, Bangladesh ought to change established suppliers and make investments closely in new spinning and material processing capability, which it at present lacks. In keeping with the Cotton Textile Export Promotion Council, Bangladesh’s textile trade wants to vary its product combine and realign its uncooked materials provide chain to profit from using US cotton. India’s textile mills are already in disaster, in accordance with Indian yarn exporters.
What’s the extent of the India-US cotton commerce?
India imports almost 500,000 bales of US cotton yearly, of which 2.5 million bales are extra-long staple (ELS) cotton and the remaining 2.5 million bales are non-ELS cotton. India is among the main customers of American PIMA cotton, a premium ELS selection. A number of textile mills in India have already been appointed by American manufacturers to provide yarn made out of American cotton for clothes. India at present imposes an 11% import tax on cotton, excluding ELS cotton. Goyal stated Indian garment exporters could have comparable entry to the US market as Bangladeshi exporters.
What are your issues?
America will impose a reciprocal tariff of 18% on Indian merchandise, however Bangladeshi merchandise might be topic to a reciprocal tariff of 19%, up from the earlier 20%. Due to this fact, the US tariff differential between India and Bangladesh was halved by the US-Bangladesh settlement. Bangladesh is already one of many main exporters of textiles and attire to the US, together with China, Vietnam and India. Each India and Bangladesh primarily produce cotton-based clothes.
Shafiqul Alam, intelligence advisor to Mohammed Yunus’ chief adviser, stated: hinduism Bangladesh doesn’t produce the cotton or yarn wanted for its textile sector, so it has historically imported cotton from India and Central Asia. He stated the US-Bangladesh commerce deal would end result within the alternative of Indian cotton with US cotton. The speedy impression is prone to be felt by India’s cotton and yarn exporters. Nevertheless, many unanswered questions stay for Indian exporters. For instance, if the US-India settlement offers Indian garment exporters comparable entry to the US market, will the Indian authorities exempt US cotton from import duties? Will it enable India to import sure portions duty-free?
Are there any advantages for clothes exporters who buy American cotton?
If demand will increase, there’s a good likelihood that the value of U.S. cotton will rise. Will U.S. prospects discover it cost-competitive to buy clothes made with U.S. cotton if cotton is on the market cheaper from different international locations? It’s also unclear how the U.S. determines the quantity of U.S. cotton in clothes and textile merchandise. Each Indian and Bangladeshi garment exporters will obtain reciprocal responsibility reduction, quite than primary responsibility, provided that they use U.S. cotton. Whereas the US exemption from customs responsibility on merchandise made out of US cotton or MMF will definitely profit Indian garment exporters, they hope the Indian authorities will evolve a system that takes under consideration all the sensible implications and requirements for the efficient operation of such amenities.
