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EconomicsSource: The Hindu

Impact of the US–Bangladesh Trade Agreement on India's Cotton Sector

Friday, 13 February 2026
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Key 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

Practice Questions

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In the context of the US–Bangladesh Trade Agreement, which of the following best explains the relationship between the rules of origin and the sourcing decisions of Bangladeshi manufacturers?