America has reduced the tariff on Indian clothes
A recent agreement between India and America has created a stir in the Asian trade market. As much happiness as this news has brought for India, it has created an equally big problem for our neighboring country Bangladesh. America has reduced the import duty (tariff) on Indian clothing and textile products to less than half. Earlier, there was 50% tax on Indian goods, now it has come down to only 18%. Business experts believe that this one decision of America is enough to break the backbone of Bangladesh’s economy, because the textile industry is the main source of income there.
India overtakes China and Bangladesh, changes the whole game
The biggest thing about this deal is that now Indian clothes in America will become cheapest compared to other countries. If we look at the figures, the new tariff system puts India in the most advantage. Now there will be 18% tax on Indian goods, while there is 20% tax on Bangladeshi goods, 20% tax on Vietnam and 30% tax on China. Pakistan has also left behind India with 19%.
The Textile Ministry clearly says that when big global buyers will get good goods from India at lower taxes, then why will they look towards Bangladesh or China? Buyers will now change their purchasing strategy and Indian exporters will directly benefit from this. This is a big blow for Bangladesh because India’s deal with the European Union had already given it sleepless nights.
Treasure worth 118 billion dollars now open to India
America is the largest market in the world and there is a huge trade of clothes worth 118 billion dollars. Till now, due to heavy taxes, India was not able to show its full strength in this market. But this agreement with Washington has completely opened the doors for India. India already exports textiles worth about $10.5 billion to America, but after this exemption this figure is expected to increase manifold. The government aims to export $100 billion by 2030 and this deal will play the biggest role in achieving that target.
Effect of Trump-Modi friendship, America also got benefit
In business, clapping is done with both hands, hence India has also given a return gift to America. Under this framework, India has reduced or eliminated taxes on many agricultural products and industrial goods coming from the US. Now products like dry distillers grains, animal feed, almonds-walnuts, fresh fruits and soybean oil from America will be easily available in the Indian market. For India this is a ‘win-win’ situation, but for Bangladesh it has become a fight for survival.