Dhaka’s interim government has announced plans to phase out imports of cotton from India in favor of supplies from the United States, following the signing of a bilateral trade agreement on February 9, 2026.
In an exclusive interview with, Shafiqul Alam, information adviser to Chief Adviser Mohammed Yunus, described the deal as a “game changer” that significantly improves Bangladesh’s access to the lucrative U.S. market. He highlighted a key provision granting a 19% tariff rate on Bangladeshi exports to the U.S.—competitive against rivals such as Cambodia and Indonesia—while offering a complete reduction to zero tariffs for textile and apparel products manufactured using U.S.-produced cotton or manmade fibers.
This incentive is expected to drive a substantial reorientation in sourcing for Bangladesh’s vast textile industry, which relies heavily on imported raw materials as the country produces neither sufficient cotton nor the necessary yarns domestically. Traditionally, India and Central Asian nations have been primary suppliers. In 2024, India exported cotton yarn valued at $1.6 billion and manmade fiber yarn worth nearly $85 million to Bangladesh, with a large portion routed through land ports.
Tensions between the two neighbors escalated in 2025, when reciprocal restrictions were imposed. Bangladesh limited Indian yarn imports via land routes on April 13, 2025, while India curbed entry of several items, including ready-made garments—Bangladesh’s top export to India—through land ports starting May 16, 2025. These measures followed a downturn in bilateral ties in mid-2024.
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The interim administration now intends to redirect its focus toward the U.S., the world’s largest market for Bangladeshi textiles. Mr. Alam called the agreement a “big boost” for the sector.
Leading economist Professor Selim Jehan of BRAC University noted that the pact has rendered Bangladesh’s cotton market particularly appealing to American producers. However, he urged caution, emphasizing the need to verify the quality of U.S. cotton against established sources such as India and Egypt. “In the textile sector, the quality of cotton matters the most,” he told . “If U.S. cotton is not up to the mark, then even the U.S. buyers may not like our products.”
Professor Jehan also pointed out potential drawbacks, including added costs from freight and transportation that could offset tariff savings. Moreover, the arrangement may limit Bangladesh’s flexibility to source from competing cotton-producing nations.
Textile stakeholders will closely monitor negotiations in the coming months to maximize benefits from the deal while ensuring product competitiveness remains intact.
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