Why in the News?
Bangladesh has announced that it will replace Indian cotton with U.S. cotton following a new trade deal with the United States. The agreement is expected to boost Bangladesh’s access to the U.S. textile market but may impact cotton trade with India.
Key Features of the Deal
1. Tariff Concession
- Standard tariff fixed at 19 percent, lower than rivals like Cambodia and Indonesia.
- Zero tariff access if Bangladesh’s textile producers use U.S. cotton or manmade fibre.
- Strong incentive to shift sourcing away from India and Central Asia.
2. Strategic Significance
- U.S. is the largest textile export market for Bangladesh. The deal strengthens Bangladesh’s export competitiveness. Bangladesh does not produce significant cotton domestically, giving it flexibility in sourcing decisions.
India–Bangladesh Cotton Trade Context
- Bangladesh is one of the largest importers of Indian cotton and yarn.
- India exported:
- $1.6 billion worth cotton yarn (2024)
- $85 million manmade fibre yarn
Tit-for-Tat Trade Restrictions (2025)
- Bangladesh restricted yarn imports from India through land ports (April 2025).
- India imposed curbs on Bangladeshi readymade garment imports (May 2025).
- Trade tensions followed a broader diplomatic strain in 2024.
Impact on India
- Possible decline in cotton and yarn exports to Bangladesh.
- Impact on Indian textile supply chains, especially land port trade.
- Strategic trade competition in South Asia.
| [2020] Consider the following statements:
1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2. “Textile and textile articles” constitute an important item of trade between India and Bangladesh. 3. In the last five years, Nepal has been the largest trading partner of India in South Asia. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 only (c) 3 only (d) 1, 2 and 3 |
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