Ludhiana: A seismic shift in US trade policy has sent shockwaves through the industrial heart of Punjab, as textile giants in Ludhiana warn of a structural collapse in competitiveness following a new trade understanding between Washington and Dhaka.The deal, which grants Bangladeshi apparel zero-tariff access to the US market provided they use American-grown cotton, threatens to undercut Indian exporters who remain shackled by average tariffs of 18%.
The Zero-Tariff TrapThe new arrangement creates a powerful incentive for Bangladeshi manufacturers to pivot their supply chains away from India. By sourcing yarn and cotton from the United States, Bangladesh can bypass the significant duties that currently apply to Indian-made garments.Ludhiana’s industry leaders say the 18% price gap is insurmountable in the low-margin world of global fashion. “Even small price differentials influence sourcing decisions in the U.S. market,” one exporter noted. “An 18 percent gap could gradually erode India’s market share entirely.”The US is the cornerstone of India’s textile economy, absorbing roughly 28% of all outbound shipments. The potential fallout is massive. India exports $10-11 billion (₹90,619 crore) in textiles to the US annually, with ready-made garments accounting for half that volume. India currently supplies Bangladesh with $3 billion (₹25,050 crore) in raw cotton and $1.5 billion (₹12,525 crore) in yarn every year.If Bangladesh switches to US cotton to secure tax-free status, Indian spinning mills and farmers will lose their primary export customer.Hosiery Heartland at RiskAs a premier hub for MSME-driven (Micro, Small, and Medium Enterprises) garment exports, Ludhiana is uniquely vulnerable. The World MSME Forum warns that global buyers are already reconsidering their sourcing strategies. Badish Jindal, president of the forum, highlighted the domino effect on the local economy. Job losses will impacting everyone from Punjab’s cotton farmers and ginners to urban spinners and tailors. Distorted competition is a “structural disadvantage” that favours Bangladeshi factories over Indian MSMEs.A Call for ParityIndustry leaders are urging New Delhi to fight fire with fire. The forum has called on the Indian govt to negotiate “tariff parity” with the U.S., arguing that Indian garments manufactured with US cotton should receive the same duty-free treatment as those from Bangladesh. Without a balanced trade negotiation, exporters fear Ludhiana’s hosiery and knitwear dominance could become a casualty of Washington’s new supply-chain diplomacy.
