Trump’s zero tariff on B'desh textiles: Should India worry?

The US-Bangladesh commercialized woody has the Indian textile assemblage exporters worried? The Donald Trump medication has reduced the tariffs connected Bangladesh to 19%, but a clause of zero tariffs connected textile exports whitethorn deed the Indian textile industry.But however hard volition India beryllium impacted? According to a caller study by Global Trade Research Initiative (GTRI), the concession of zero tariffs to Bangladesh volition not pb to a large surge successful the country’s exports. The associated connection says the US volition connection zero reciprocal tariff connected garments which are made utilizing US-origin fabric and man-made fibres.

How overmuch volition zero tariffs connected Bangladesh textiles wounded India?

In applicable terms, a Bangladeshi garment that usually faces a 12% US MFN tariff would pull a full work of 31% (12% MFN + 19% reciprocal).

For India, the comparable full would beryllium astir 30% (12% MFN + 18% reciprocal). But Bangladeshi garments made with US fibres would debar the reciprocal duty, paying conscionable the 12% MFN tariff, the GTRI study says.Also Read | Trump removes 25% penal tariff: What happens if India stops buying Russian crude oil?“While this appears to beryllium a important concession, Bangladesh’s export operation and its dense dependence connected non-US textile inputs mean the statement is apt to effect successful lone a constricted summation successful garment exports to the U.S,” says Ajay Srivastava, laminitis of GTRI.

In 2024, Bangladesh’s planetary garment exports were $50.9 billion, which is overmuch higher than India’s $16.3 billion. More than 63% of Bangladesh’s exports were directed to the European Union, wherever shipments get duty-free access. Exports to the United States were $7.4 billion, with Bangladeshi garments continuing to look an mean MFN tariff of astir 12 percent aft the withdrawal of US GSP benefits successful 2019. Since the European Union remains Bangladesh’s superior market, its accumulation and proviso chains person mostly evolved to cater to European request and are improbable to acquisition accelerated changes to comply with conditional US sourcing requirements, says GTRI.The operation of Bangladesh’s garment manufacture besides reflects a beardown dependence connected imported earthy materials. In 2024, the state imported fibres, yarns and fabrics worthy $16.1 billion. China accounted for astir $9 cardinal of these supplies, India for $3.1 billion, and the United States for lone $274 million.At a much elaborate level, the imbalance becomes clearer. Bangladesh imported fabric fibre worthy $2.5 billion, with India supplying $655 cardinal and Brazil $604 million, portion imports from the United States were constricted to $255 million.Also Read | 18% tariffs, boost to exports, agriculture protected: How India benefits from commercialized woody with US? Explained Cotton yarn imports totalled $1.8 billion, of which India unsocial accounted for $1.6 billion. In the lawsuit of fabrics, peculiarly woven synthetic filament fabrics that are captious for garment production, China remained the ascendant supplier, providing $1.1 cardinal retired of full imports valued astatine $1.4 billion, compared with conscionable $88 cardinal sourced from the United States.Out of full woven fabric cloth imports valued astatine $1.3 billion, China accounted for $601 cardinal portion India supplied $194 million.

A akin inclination is disposable successful synthetic filament yarn imports, wherever China contributed $329 cardinal retired of a full of $442 million, compared with $53 cardinal from India.The important stock of yarn and cloth imports comparative to fibre imports indicates that little than one-third of Bangladesh’s garments are produced starting from earthy fibre. Most apparel manufacturing relies connected imported yarns and fabrics alternatively than basal fibre inputs. The United States chiefly supplies earthy fabric to Bangladesh and that excessively successful comparatively tiny quantities, whereas India and China supply the yarns and fabrics that signifier the backbone of Bangladesh’s garment production. In bid to payment from zero-tariff access, Bangladesh would request to regenerate long-standing suppliers and marque important investments successful spinning and fabric-processing infrastructure, capableness that is presently limited, says GTRI.Since the European Union accounts for astir two-thirds of Bangladesh’s garment exports and already provides unconditional duty-free access, the inducement to reorganise proviso chains chiefly to service the US marketplace remains limited.