Bangladesh has signed a new trade agreement with the United States, reducing its counter-tariff rate by one percentage point to 19 percent. The deal, finalized a week after a separate US-India trade understanding, includes a key provision allowing certain Bangladeshi garments made with US cotton and synthetic fibers to enter the American market duty-free. This clause has sparked concern among Indian textile exporters and cotton traders, who fear losing competitiveness in the US market where Indian products still face an 18 percent tariff.

India’s textile sector, which contributes 2.3 percent to its GDP and sends about 30 percent of its exports to the US, had initially welcomed Washington’s tariff reduction from 50 to 18 percent. However, the new Bangladesh-US deal is seen as undermining that advantage. Analysts note that Bangladesh, the world’s largest cotton importer, may now shift more purchases toward US cotton, further pressuring Indian cotton exporters.

The development has already affected Indian textile and yarn company shares, while the opposition Congress party criticized Prime Minister Narendra Modi’s government, calling the deal a dual blow to India’s economy and textile workers.