EconomicsSource: The Hindu
Impact of the US–Bangladesh Trade Agreement on India's Cotton Sector
Friday, 13 February 2026
Read Original ArticleKey Points
The recent **US–Bangladesh Trade Agreement** significantly impacts India's cotton sector, creating competitive challenges. Key aspects include **tariff reductions**, a **zero-tariff mechanism** for Bangladeshi goods, and Bangladesh's commitment to purchase US agricultural products. This shift threatens India's cotton exports and market position, urging India to adopt measures like lobbying for **cotton parity** and diversifying markets.
Detailed Coverage
- Tariff Reduction: Bangladesh's tariff decreases from 20% to 19%.
- Zero-Tariff Mechanism: Allows Bangladeshi textiles to enter the US at zero tariff.
- Conditionality: Zero-tariff benefits depend on using US cotton.
- Reciprocal Commitments: Bangladesh commits to buying USD 3.5 billion in US agricultural products.
- Erosion of Tariff Advantage: India's tariff advantage narrows to just 1%.
- Loss of Key Market: Bangladesh accounts for 70% of India's cotton exports.
- Lobby for Cotton Parity: Seek zero-duty access for garments made from US cotton.
- Fast-track BTA: Reduce non-tariff barriers for US market access.
- Counter with ESG: Promote sustainable manufacturing practices.
- Pivot to MMF: Focus on competitive man-made fibres.
- Implement Kasturi Strategy: Use blockchain for ethical cotton verification.
- Focus on Technical Textiles: Target high-tech segments for global competition.
- Market Diversification: Explore new export destinations to reduce US reliance.
- Recent News: Bangladesh and the US signed a reciprocal trade agreement.
Economics