Is The 'Zero-Tariff Clause' In US-Bangladesh Trade Deal Bad News For Indian Textiles?

Last Updated:February 11, 2026, 08:56 IST

Will Bangladesh now buy raw materials like cotton from the US instead of India? News18 breaks down the 'Zero Tariff Clause' that Congress says will hurt Indian textile hubs

The US-Bangladesh trade deal has sparked a political storm in India, with the opposition Congress alleging that the ‘Zero Tariff Clause‘ in the agreement would decimate India’s garment and textile industry since Dhaka would now buy raw materials from the United States instead.

In a post on X, the Congress said zero-duty benefit could incentivise Bangladesh to use more American cotton instead of Indian cotton. It added that Indian textile hubs like Tirupur, Surat and Panipat are at risk of losing livelihood.

Many experts, however, disagree with the Congress’s analysis, pointing to the difference in quality and the fact that the US-Bangladesh trade deal comes with a tough condition — Dhaka will only benefit from the zero-duty clause if it buys ‘man-made yarn’ and cotton yarn from the US. According to them, meeting this condition is very difficult for Bangladesh.

On the other hand, the raw materials India supplies to Bangladesh are not only priced reasonably, but also delivered quickly. Indian goods reach Bangladeshi exporters within a week, while goods from the US take weeks to arrive.

Former Indian High Commissioner to Bangladesh Veena Sikri said that under the new trade deal, Dhaka has promised to buy expensive items, including Boeing jets, from the US, but does not have the funds to do so. In such a scenario, Bangladesh will have to borrow from the IMF again. Buying expensive raw materials from the US in exchange for loans could end up jeopardising Bangladesh’s economy further.

News18 answers some key questions about the ‘Zero Tariff Clause’ and what impact it might have on India’s garment hubs:

What is Congress’s claim on the ‘Zero Tariff Clause’?

The Congress says that Bangladesh will now use American cotton and fibre so it can pay 0% tariff on clothing exports to the US market, whereas India has to pay an 18% tariff.

Is it cheaper for Bangladesh to import cotton from the US?

Absolutely not. According to 2026 data, the global price of American cotton is around 75 cents per pound. After adding shipping, logistics, and other costs, this would cost Bangladesh approximately Rs 14,800 per quintal.

What is the price of cotton in India?

The price of cotton in India currently ranges from Rs 6,200 to Rs 7,800 per quintal (depending on the variety). This means American cotton is almost twice as expensive as Indian cotton.

What is the math behind the 19% tariff exemption and raw material prices?

Even if Bangladesh saves 19% on tariffs by purchasing cotton from the US that is 100% more expensive, its total production cost will still be higher than using cheaper raw materials from India. If the raw materials themselves are twice as expensive, a 19% tariff saving will not make Bangladeshi textiles cheaper than Indian textiles.

What is the difference in shipping time?

Cotton or yarn from India reaches Bangladesh in 3 to 7 days by truck or train. Goods from the US take 30 to 45 days by sea. Longer lead times mean higher interest costs and larger inventory expenses.

How much American cotton does Bangladesh buy now?

According to statistics, Bangladesh imports more than 70% of its cotton needs from India, along with some from Brazil. The share of American cotton is very limited because it is not cost-effective. It also falls into the premium category and is expensive to transport.

Can Bangladesh stop supplies from India overnight?

No. Bangladesh’s textile hubs, such as Gazipur and Savar, have machinery and supply chains designed to handle the quality of Indian cotton. They would need major changes to their manufacturing lines to accommodate American fibre.

What is the real condition of the ‘Zero Tariff Clause’?

This US requirement is often similar to the ‘Yarn Forward Rule’, meaning every single thread in a fabric must be American. For a country like Bangladesh, relying solely on American yarn for its entire supply chain poses a significant risk.

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