Mint Explainer | India vs Bangladesh: Who really wins in the US textile tariff reset?

Dhaka has been offered a zero reciprocal tariff on garments made using US-origin cotton and man-made fibres, a concession India does not have. But that advantage comes with strict sourcing conditions. Since Bangladesh’s garment sector is not built around fibre-based production, the benefit may be difficult to use at scale.

India, despite facing similar headline tariff levels, may gain more in practice. Its textile industry is vertically integrated and its market access is not tied to US-origin inputs, giving exporters greater flexibility.

Mint explains how the two frameworks compare, and why India could emerge with more durable advantages.

What has the US offered Bangladesh on textiles?

Under the US–Bangladesh joint statement of 9 February, Washington agreed to cut reciprocal tariffs on Bangladeshi goods to 19% and provide zero reciprocal duty on garments made using US-origin cotton and man-made fibres.

In practical terms, Bangladeshi garments that normally face a 12% US most-favoured-nation (MFN) tariff would attract a total duty of 31% unless they use US fibres, in which case the duty would fall back to 12%.

On paper, that looks like a meaningful concession.

India’s textile exports to the US stood at $10.32 billion in FY25, compared with $7.4 billion from Bangladesh, even though Bangladesh is the world’s second-largest garment exporter.

Why is the Bangladesh offer difficult to use?

Because Bangladesh’s garment industry is not structured around fibre production.

Less than one-third of its garments are made starting from fibre. Most rely on imported yarns and fabrics rather than raw cotton. In 2024, Bangladesh imported $16.1 billion worth of textile inputs, with China supplying $9 billion and India $3.1 billion. The US supplied just $274 million, mostly raw cotton.

To qualify for zero-duty access, manufacturers would have to significantly increase the use of US fibres and invest in spinning and fabric capacity that the industry currently lacks.

The incentive to undertake such restructuring is limited. Over 63% of Bangladesh’s garment exports already go to the European Union duty-free, reducing the urgency of redesigning supply chains mainly for the US market.

Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), said the structure of the arrangement makes it difficult for Bangladesh to fully utilize the zero-duty access being offered.

“Bangladesh’s apparel industry is deeply integrated with Asian supply chains, particularly for yarns and fabrics. For an industry structurally dependent on Asian yarns and fabrics, the zero-duty carrot is hard to use at scale, making the trade-off lopsided. As the costs of these commitments become clearer and the export gains remain modest, Bangladesh is likely to regret the imbalance built into this deal,” said Srivastava.

What has India secured under its US trade framework?

India does not get zero-duty access for garments at present. This has not been confirmed by either the Indian government or the US administration, nor is it mentioned in the Joint Statement issued by the White House on 6 February.

Indian apparel exports are expected to face a combined duty of around 30% – 12% MFN plus 18% reciprocal.

Unlike Bangladesh, however, India’s access is not tied to fibre-origin conditions. Exporters can continue using existing domestic and regional supply chains without restructuring sourcing to meet US-specific requirements.

India’s textile industry spans cotton, yarn, fabric and garment production. That vertical integration provides flexibility to scale orders once tariff uncertainty eases, even if headline duty rates remain relatively high.

Does market structure matter?

Yes.

Bangladesh is heavily dependent on the EU market, which absorbs over $32 billion of its $50.9 billion garment exports annually and already offers unconditional duty-free access. The US accounts for a smaller share, making it less compelling to redesign supply chains for a conditional benefit.

India, by contrast, has been seeking to expand its presence in the US as buyers diversify away from China. With tariff rates now clearer, exporters say visibility has improved, which could support fresh bookings and longer-term supply contracts, particularly in labour-intensive segments such as apparel, home textiles and made-ups.

Does India stand to gain?

India remains a major supplier of yarn and fabrics to Bangladeshi garment factories. If Bangladesh finds it difficult to meet US sourcing conditions, its dependence on Indian textile inputs is unlikely to fall.

That positions India not only as a competing garment exporter but also as an upstream supplier within regional textile value chains.

Gains, however, are unlikely to be immediate or dramatic.

“The zero-duty window is narrow and conditional. India’s arrangement may not look generous, but it allows exporters to operate without changing supply chains, which is far more valuable in the long run,” said Abhas Kumar, trade expert.

Whether that translates into sustained export growth will depend on cost competitiveness, execution, and how effectively Indian exporters respond to shifts in global apparel supply chains.