CAI President Vinay Kotak, while talking to CNBC Awaaz, told how the US-Bangladesh deal can affect India's textile market.
The duty exemption given by America is given only in proportion to the value of cotton, that is, if the total price of an apparel is ₹ 100 and the value of cotton in it is ₹ 20, then the benefit of 18% duty exemption is given only on that ₹ 20. This means that the profit is only around 3–4% of the total value.
Bangladesh's total exports are about 25% to America, while about 50% of its apparel is being exported to Europe. Whereas India's exports to America are about 15%. India can benefit from the new policies that America is making—especially towards reducing dependence on China. Therefore, there is a possibility that India's share (market share) will increase slightly, not decrease.
On the other hand, till now Bangladesh had the benefit of zero duty in Europe, due to which India was at a loss. But from January 1, 2027, there will be no duty on India's exports to Europe. This will give us an opportunity to expand significantly in the European market and we can leave Bangladesh behind to a great extent in that area.
India's cotton is going to Bangladesh because we have a locational advantage — goods from India take only 8 days to reach Bangladesh, while the same goods from the US take at least 45 days. For this reason, the mills there are buying cotton from India even at slightly higher prices. If road route exports from India resume, we will not face any significant difference.
Just as there is a duty-free quota for Australian cotton, there should be a duty-free quota for American cotton as well. Then there will be no problem in competition. At present, there is about 11% duty on American cotton, which is burdensome (difficult) for us. Even if we import it under advance license, we have to suffer an average loss of 4.5% duty in the form of incentives.
Therefore, either the entire duty on cotton import should be abolished, or at least a duty-free quota of 5 to 10 lakh bales should be fixed for imports from America.
