Shares of Indian textile companies declined in trading on 10 February following the announcement that the United States and Bangladesh had concluded an agreement on reciprocal trade. The fall came after a sharp rally in textile stocks earlier, triggered by the announcement of the India–US trade framework.
Gokaldas Exports led the losses, with its shares falling more than 5%. KPR Mill and Arvind declined by over 4% each, while Pearl Global Industries slipped more than 3.5%. The sell-off reflected investor concerns over increased competition for Indian exporters in the US market.
Under the US–Bangladesh agreement, Washington has committed to establishing a mechanism that will allow certain textile and apparel goods from Bangladesh to enter the United States at a zero reciprocal tariff rate. According to the joint statement issued by the two governments, a specified volume of apparel and textile imports from Bangladesh will qualify for the reduced tariff, with the volume linked to Bangladesh’s use of US-produced inputs such as cotton and man-made fibre textiles.
By contrast, the recently announced trade framework between the United States and India provides for a reduction in the reciprocal tariff on Indian textile exports to 18% from the current level of 50%. While this represents a significant improvement for Indian exporters, market participants remain cautious as Bangladeshi exporters stand to benefit from zero tariffs on selected textile and apparel shipments to the US.
The overall US tariff rate on Bangladeshi exports has been reduced to 19%, marginally higher than India’s 18% rate. In their joint statement, the US and Bangladesh said the agreement would offer exporters from both countries unprecedented access to each other’s markets and would build on their longstanding economic relationship.
Investors are now weighing the implications of the competing trade arrangements, with concerns that preferential access for Bangladeshi apparel could intensify competition in the US market for Indian textile manufacturers despite the lower tariffs secured under the India–US framework.
