Tue, Feb 10,
Insights
CITI is monitoring US tariff developments, warning that potential zero reciprocal tariffs for Bangladesh could intensify competition in India's largest export market.
The tariff gap has narrowed from 2 per cent to 1 per cent, a concern in a low-margin sector.
The proposed US–Bangladesh agreement may also hurt India's cotton yarn exports to Bangladesh, increasing competitive pressure.
The Confederation of Indian Textile Industry (CITI) is closely monitoring developments related to US tariffs on various countries and their potential impact on textile and apparel exports to the world’s largest economy, chairman Ashwin Chandran has said.
While CITI is awaiting clarity on the mechanism to be put in place by the US, “that will allow for certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate”, it acknowledges that this opens a fresh challenge for India’s textiles and apparel exporters, for whom the United States is their single-largest market.
This challenge is two-fold. First, the tariff differential between India and Bangladesh has halved from 2 per cent to 1 per cent, which is a matter of concern in a sector with narrow profit margins. Secondly, the US–Bangladesh Agreement on Reciprocal Trade could likely adversely affect India’s cotton yarn exports to Bangladesh, Chandran said in a press release.
Bangladesh is already among the leading exporters of textiles and apparel to the United States, alongside China, Vietnam, and India. Any additional advantage for Bangladesh could further increase competition for Indian exporters.