15 Feb 2026·Source: The Hindu

4 min

EconomyInternational RelationsNEWS

U.S.-Bangladesh Trade Deal: Implications for Indian Garment Exporters

Analyzing the U.S.-Bangladesh trade deal's impact on Indian garment exporters.

In the U.S.-Bangladesh Agreement on Reciprocal Trade, the U.S. has committed to establishing a mechanism for certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate, based on the use of U.S.-produced cotton and man-made fiber textile inputs. Indian Minister Piyush Goyal stated that India is to have the same facility as Bangladesh.

Of Bangladesh's total textile inputs imports of $16.1 billion in 2024, $3.1 billion came from India. Indian textile and garment exporters feel things will not change immediately due to the U.S.-Bangladesh deal. Bangladesh's garment industry depends heavily on imported textile inputs, especially yarn and fabric.

India imports close to five lakh bales of U.S. cotton annually. Indian garment exporters will get similar access to the U.S.

market as Bangladesh exporters. Concerns remain regarding the tariff difference between India and Bangladesh. The immediate impact is likely to be on Indian cotton and yarn exporters.

Key Facts

The U.S. and Bangladesh signed an Agreement on Reciprocal Trade on February 9.

The U.S. has committed to establish a mechanism for certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate.

The zero tariff rate is based on the use of U.S.-produced cotton and man-made fiber textile inputs.

Indian Minister Piyush Goyal stated that India is to have the same facility as Bangladesh.

UPSC Exam Angles

GS Paper 2: International Relations, Bilateral Agreements

GS Paper 3: Economy, Trade Agreements and their impact

Potential question types: Statement-based, analytical questions on trade policy

In Simple Words

The U.S. and Bangladesh made a deal: if Bangladesh uses American cotton to make clothes, the U.S. will charge them fewer taxes when those clothes are sold in America. India wants the same deal. This could mean Indian companies might start buying more cotton from the U.S. to get similar tax breaks.

India Angle

This affects Indian garment businesses. If India gets a similar deal, they might buy more U.S. cotton to lower their export taxes to the U.S. This could change where they get their cotton from and how much profit they make.

For Instance

Imagine a shopkeeper getting a discount on supplies if they buy from a specific wholesaler. Similarly, Indian garment exporters might get tax breaks if they buy U.S. cotton.

This could change the prices of clothes you buy and where those clothes are made. It also affects jobs in the Indian textile industry.

Trade deals can change where things are made and how much they cost.

Visual Insights

Key Statistics from U.S.-Bangladesh Trade Deal News

Highlights key figures related to textile imports and trade between U.S., Bangladesh, and India.

Bangladesh Textile Inputs Imports (2024): $16.1 Billion
India's Share in Bangladesh Textile Imports (2024): $3.1 Billion
U.S. Cotton Imports by India (Annual): 5 Lakh Bales

More Information

Background

The concept of reciprocal trade agreements has historical roots in the evolution of international trade. Early trade agreements often focused on reducing tariffs and other barriers to trade between nations. The General Agreement on Tariffs and Trade (GATT), established in 1948, laid the foundation for multilateral trade negotiations aimed at promoting free and fair trade among member countries. Over time, trade agreements have become more complex, encompassing a wider range of issues beyond tariffs, such as intellectual property rights, investment, and environmental standards. The establishment of the World Trade Organization (WTO) in 1995 marked a significant step in the evolution of the global trading system, providing a framework for resolving trade disputes and enforcing trade rules. Regional trade agreements, such as the North American Free Trade Agreement (NAFTA) and the European Union (EU), have also played a crucial role in shaping international trade patterns. In the Indian context, trade policy is guided by the principles of promoting economic growth, enhancing competitiveness, and ensuring equitable distribution of benefits. The Directorate General of Foreign Trade (DGFT) is responsible for implementing India's foreign trade policy. India has entered into various bilateral and regional trade agreements with countries and regions around the world, including the Comprehensive Economic Partnership Agreement (CEPA) with South Korea and the Free Trade Agreement (FTA) with ASEAN.

Latest Developments

Recent developments in international trade include a growing emphasis on sustainable and inclusive trade practices. Governments and businesses are increasingly focusing on incorporating environmental and social considerations into trade agreements and supply chains. The rise of e-commerce has also transformed the landscape of international trade, creating new opportunities for businesses to reach global markets. Ongoing debates in the field of international trade revolve around issues such as trade imbalances, protectionism, and the impact of trade on employment and income inequality. Institutions like the World Bank and the International Monetary Fund (IMF) play a crucial role in analyzing trade trends and providing policy recommendations to member countries. The future of international trade is likely to be shaped by factors such as technological advancements, geopolitical tensions, and the evolving global economic landscape. Looking ahead, governments are expected to prioritize efforts to strengthen the multilateral trading system, promote regional integration, and address emerging challenges such as climate change and digital trade. The negotiation of new trade agreements and the reform of existing ones will be key priorities for policymakers in the years to come.

Frequently Asked Questions

1. What are the key facts about the U.S.-Bangladesh trade agreement that are important for the UPSC Prelims exam?

The U.S. and Bangladesh signed an Agreement on Reciprocal Trade on February 9. The U.S. has committed to establishing a mechanism for certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate, based on the use of U.S.-produced cotton and man-made fiber textile inputs. Piyush Goyal stated that India is to have the same facility as Bangladesh.

Exam Tip

Remember the date of the agreement and the key condition for the zero tariff rate. Focus on the implications for India.

2. Explain the concept of 'reciprocal trade agreements' in the context of international trade. What is its historical background?

Reciprocal trade agreements involve mutual reductions in tariffs and other trade barriers between participating countries. Historically, these agreements evolved from early efforts to lower trade barriers, with the General Agreement on Tariffs and Trade (GATT) playing a crucial role in promoting multilateral trade negotiations.

3. How might the U.S.-Bangladesh trade deal impact Indian garment exporters, and what are the potential pros and cons for India?

The U.S.-Bangladesh trade deal, while potentially creating competition for Indian garment exporters, also presents an opportunity for India to secure similar trade terms with the U.S., as stated by Minister Piyush Goyal. A potential con is that if India doesn't get similar terms, its exports to the U.S. could become less competitive. A pro is that India already supplies a significant amount of textile inputs to Bangladesh, which could increase.

4. What recent developments in international trade are relevant to the U.S.-Bangladesh agreement and its impact on India?

Recent developments include a growing emphasis on sustainable and inclusive trade practices, with governments and businesses focusing on environmental and social considerations in trade agreements. The rise of e-commerce is also transforming international trade.

5. What is the Most Favored Nation (MFN) principle, and how does it relate to reciprocal trade agreements like the one between the U.S. and Bangladesh?

The Most Favored Nation (MFN) principle requires a country to provide any trade advantages, concessions, or privileges it grants to one country to all other MFN member countries. Reciprocal trade agreements can sometimes be exceptions to the MFN principle, offering preferential treatment to specific countries under certain conditions.

6. Considering the U.S.-Bangladesh trade agreement, what are some potential government initiatives India could undertake to support its garment exporters?

Based on available information, potential government initiatives could include negotiating similar trade agreements with the U.S. to ensure Indian garment exporters receive the same benefits as Bangladesh. The government could also focus on policies that enhance the competitiveness of the Indian textile industry, such as reducing input costs or improving infrastructure.

Practice Questions (MCQs)

1. Consider the following statements regarding the U.S.-Bangladesh Agreement on Reciprocal Trade: 1. The agreement allows certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate. 2. This zero tariff is conditional on the use of U.S.-produced cotton and man-made fiber textile inputs. 3. According to Piyush Goyal, India will not have the same facility as Bangladesh. Which of the statements given above is/are correct?

A.1 and 2 only
B.2 and 3 only
C.1 and 3 only
D.1, 2 and 3

Show Answer

Answer: A

Statement 1 is CORRECT: The U.S.-Bangladesh Agreement on Reciprocal Trade indeed allows certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate. Statement 2 is CORRECT: This zero tariff is based on the condition that U.S.-produced cotton and man-made fiber textile inputs are used. Statement 3 is INCORRECT: Piyush Goyal stated that India is to have the same facility as Bangladesh. Therefore, the correct answer is A.

2. In the context of the U.S.-Bangladesh trade deal, what was the total value of Bangladesh's textile inputs imports in 2024, and how much of it came from India?

A.Total: $10.5 billion, India: $2.1 billion
B.Total: $16.1 billion, India: $3.1 billion
C.Total: $12.8 billion, India: $4.5 billion
D.Total: $14.2 billion, India: $2.8 billion

Show Answer

Answer: B

According to the provided information, Bangladesh's total textile inputs imports in 2024 amounted to $16.1 billion, out of which $3.1 billion came from India. Therefore, option B is the correct answer.

3. Which of the following statements accurately reflects the potential impact of the U.S.-Bangladesh trade deal on Indian cotton and yarn exporters?

A.The deal will immediately and significantly reduce Indian cotton and yarn exports to Bangladesh.
B.The deal is unlikely to have any impact on Indian cotton and yarn exports.
C.The immediate impact is likely to be on Indian cotton and yarn exporters.
D.The deal will lead to a surge in Indian cotton and yarn exports to the U.S.

Show Answer

Answer: C

The provided summary indicates that the immediate impact of the U.S.-Bangladesh trade deal is likely to be on Indian cotton and yarn exporters. This is because the deal provides preferential access to Bangladeshi garment exporters who use U.S.-produced cotton, potentially affecting the demand for Indian cotton and yarn in Bangladesh. Therefore, option C is the correct answer.